December 31, 2024, the Accounts Receivable balance of Advanced Automotive Technology is $155,000. The Allowance for Bad Debts account has a $7,080 debit balance. Advanced Automotive Technology prepares the following aging schedule for its accounts receivable:
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
At
the
is
The Allowance for
debit balance.
prepares the following aging schedule for its accounts receivable:
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|
Age of Accounts
|
|||
|---|---|---|---|---|
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1-30 Days
|
31-60 Days
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61-90 Days
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Over 90 Days
|
|
Accounts Receivable
|
$60,000
|
$40,000
|
$50,000
|
$5,000
|
|
Estimated percent uncollectible
|
0.8%
|
4.0%
|
7.0%
|
52.0%
|
|
1.
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Journalize the year-end
December
31,
2024.
|
|
2.
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Show how
Advanced Automotive Technology
will report its net accounts receivable on its
December
31,
2024,
|
|
|
|
Age of Accounts
|
||||||||
|
|
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1-30
|
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31-60
|
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61-90
|
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Over 90
|
Total
|
|
|
|
Days
|
|
Days
|
|
Days
|
|
Days
|
|
Balance
|
|
|
Accounts Receivable
|
$60,000
|
$40,000
|
$50,000
|
$5,000
|
|
|||||
|
Estimated percent uncollectible
|
0.8
|
%
|
4.0
|
%
|
7.0
|
%
|
52.0
|
%
|
|
|
|
Estimated total uncollectible
|
|
|
|
|
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