Following is a list of credit customers along with their amounts owed due and the days past due at December 31. Following that list are five classifications of accounts receivable and estimated bad debts percent for each class. Days Past Due 0 1 to 30 31 to 60 61 to 90 Over 90 Percent uncollectible 2 % 4 % 6 % 9 % 13 % Customer Accounts Receivable Days Past Due BCC Company $ 5,700 12 Lannister Co. 2,700 0 Mike Properties 6,700 103 Ted Reeves 1,500 76 Jen Steffens 3,700 40 1. Create an aging of accounts receivable schedule of accounts receivable by age similar to the table given above. Calculate the estimated balance for the Allowance for Doubtful Accounts. 2. Assuming an unadjusted credit balance of $270, record the required adjustment to the Allowance for Doubtful Accounts.
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.
Following is a list of credit customers along with their amounts owed due and the days past due at December 31. Following that list are five classifications of
| Days Past Due | ||||||||||||||||||||
| 0 | 1 to 30 | 31 to 60 | 61 to 90 | Over 90 | ||||||||||||||||
| Percent uncollectible | 2 | % | 4 | % | 6 | % | 9 | % | 13 | % | ||||||||||
| Customer | Accounts Receivable |
Days Past Due |
||||
| BCC Company | $ | 5,700 | 12 | |||
| Lannister Co. | 2,700 | 0 | ||||
| Mike Properties | 6,700 | 103 | ||||
| Ted Reeves | 1,500 | 76 | ||||
| Jen Steffens | 3,700 | 40 | ||||
1. Create an aging of accounts receivable schedule of accounts receivable by age similar to the table given above. Calculate the estimated balance for the Allowance for Doubtful Accounts.
2. Assuming an unadjusted credit balance of $270, record the required adjustment to the Allowance for Doubtful Accounts.
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