Estimating Allowance for Doubtful Accounts Kirchhoff Industries has a past history of uncollectible accounts, as shown below. Age Class Percent Uncollectible Not past due 2% 1-30 days past due 5 31-60 days past due 20 61-90 days past due 30 Over 90 days past due 45 Estimate the allowance for doubtful accounts, based on the aging of receivables schedule below. Kirchhoff Industries Aging of Receivables Schedule Customer Balance Not Past Due 1-30 Days Past Due 31-60 Days Past Due 61-90 Days Past Due Over 90 Days Past Due Subtotals 665,900 392,900 146,500 59,900 33,300 33,300 Conover Industries 13,900 13,900 Keystone Company 17,100 17,100 Moxie Creek Inc. 6,400 6,400 Rainbow Company 9,600 9,600 Swanson Company 30,000 30,000 Totals 742,900 422,900 156,100 66,300 50,400 47,200 Percentage uncollectible 2% 5% 20% 30% 45% Allowance for Doubtful Accounts fill in the blank 1 fill in the blank 2 fill in the blank 3 fill in the blank 4 fill in the blank 5 fill in the blank 6
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.
Estimating Allowance for Doubtful Accounts
Kirchhoff Industries has a past history of uncollectible accounts, as shown below.
| Age Class | Percent Uncollectible | |
|---|---|---|
| Not past due | 2% | |
| 1-30 days past due | 5 | |
| 31-60 days past due | 20 | |
| 61-90 days past due | 30 | |
| Over 90 days past due | 45 |
Estimate the allowance for doubtful accounts, based on the aging of receivables schedule below.
| Kirchhoff Industries | ||||||
| Aging of Receivables Schedule | ||||||
| Customer | Balance | Not Past Due | 1-30 Days Past Due | 31-60 Days Past Due | 61-90 Days Past Due | Over 90 Days Past Due |
| Subtotals | 665,900 | 392,900 | 146,500 | 59,900 | 33,300 | 33,300 |
| Conover Industries | 13,900 | 13,900 | ||||
| Keystone Company | 17,100 | 17,100 | ||||
| Moxie Creek Inc. | 6,400 | 6,400 | ||||
| Rainbow Company | 9,600 | 9,600 | ||||
| Swanson Company | 30,000 | 30,000 | ||||
| Totals | 742,900 | 422,900 | 156,100 | 66,300 | 50,400 | 47,200 |
| Percentage uncollectible | 2% | 5% | 20% | 30% | 45% | |
| Allowance for Doubtful Accounts | fill in the blank 1 | fill in the blank 2 | fill in the blank 3 | fill in the blank 4 | fill in the blank 5 | fill in the blank 6 |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
