DIRECTION: Prepare an aging of receivable Sigma Company began operations on January 1, 2013. On December 31,2013, the entity provided for uncollectible accounts based on 1% of annual credit sales. On January 1,2014, the entity changed the method of determining the allowance for uncollectible accounts by applying certain percentages to the accounts receivable aging as follows: Days past invoice date 0- 30 31 - 90 91 - 180 Over 180 Percent uncollectible 1 5 20 80 In addition, the entity wrote off all accounts receivable that were over 1 year old. The following additional information related to the years ended December 31,2014 and 2013: 2014 2013 Credit sales 3,000,000 2,800,000 Collections, 2,915,000 2,400,000 including recovery Accounts 27,000 none written off Recovery of accounts previously written off 7,000 none Days past invoice date at December 31 0- 30 300,000 250,000 31 - 90 80,000 90,000 91 - 180 60,000 45,000 Over 180 25,000 15,000 What is the amount of uncollectible accounts expense for 2014?
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.
DIRECTION: Prepare an aging of receivable
Sigma Company began operations on January 1, 2013. On December 31,2013, the entity provided for
uncollectible accounts based on 1% of annual credit sales.
On January 1,2014, the entity changed the method of determining the allowance for uncollectible
accounts by applying certain percentages to the
Days past invoice date
0- 30
31 - 90
91 - 180
Over 180
Percent uncollectible
1
5
20
80
In addition, the entity wrote off all accounts receivable that were over 1 year old. The following
additional information related to the years ended December 31,2014 and 2013:
2014 2013
Credit sales 3,000,000 2,800,000
Collections, 2,915,000 2,400,000
including recovery
Accounts 27,000 none
written off
Recovery of accounts previously written off 7,000 none
Days past invoice date at December 31
0- 30 300,000 250,000
31 - 90 80,000 90,000
91 - 180 60,000 45,000
Over 180 25,000 15,000
What is the amount of uncollectible accounts expense for 2014?
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