Gray Tabby, Inc. provided the following aging of its receivables at December 31. Age of Accounts Receivables Balance Estimated % Uncollectible 0-30 days $368,000 0.8% 31 to 60 day 192,000 4.8% 61 to 90 days 68,000 12.0% 91 to 120 days 41,600 18.2% Over 121 days 22,400 76.4% Total $692,000 During the year, $25,024 of receivables were written off. The balance at the beginning of the year in the allowance account was $23,760. A. How much will Gray Tabby report as uncollectible accounts expense for the year? B. How much is the net realizable value of Gray Tabby’s receivables at year end? C. Use the journal entry to record bad debt expense.
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.
Gray Tabby, Inc. provided the following aging of its receivables at December 31.
| Age of |
Receivables Balance | Estimated % Uncollectible |
| 0-30 days | $368,000 | 0.8% |
| 31 to 60 day | 192,000 | 4.8% |
| 61 to 90 days | 68,000 | 12.0% |
| 91 to 120 days | 41,600 | 18.2% |
| Over 121 days | 22,400 | 76.4% |
| Total | $692,000 |
During the year, $25,024 of receivables were written off. The balance at the beginning of the year in the allowance account was $23,760.
A. How much will Gray Tabby report as uncollectible accounts expense for the year?
B. How much is the net realizable value of Gray Tabby’s receivables at year end?
C. Use the
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
