Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $46,310 and $3,650, respectively. During the year, the company wrote off $2,740 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: Number of days past due Receivables amount % Likely to be uncollectible Current $77,000 1% 0-30 28,400 5% 31-60 7,460 10% 61-90 3,920 25% Over 90 3,600 50% Total $120,380 What will Domino record as Uncollectible Accounts Expense for Year 2
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.
Domino Company uses the aging of
| Number of days past due | Receivables amount | % Likely to be uncollectible | |
| Current | $77,000 | 1% | |
| 0-30 | 28,400 | 5% | |
| 31-60 | 7,460 | 10% | |
| 61-90 | 3,920 | 25% | |
| Over 90 | 3,600 | 50% | |
| Total | $120,380 |
What will Domino record as Uncollectible Accounts Expense for Year 2?
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