Kirchhoff Industries has a past history of uncollectible accounts, as shown below. Age Class Percent Uncollectible Not past due 1% 1-30 days past due 5 31-60 days past due 25 61-90 days past due 35 Over 90 days past due 50 Estimate the allowance for doubtful accounts, based on the aging of receivables schedule below. Kirchhoff IndustriesAging of Receivables Scheduleblank 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 840,000 495,600 184,800 75,600 42,000 42,000 Conover Industries 18,100 18,100 Keystone Company 18,200 18,200 Moxie Creek Inc. 6,600 6,600 Rainbow Company 10,000 10,000 Swanson Company 23,100 23,100 Total receivables 916,000 518,700 194,800 82,200 60,200 60,100 Percentage uncollectible 1% 5% 25% 35% 50% 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.
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Estimating Allowance for Doubtful Accounts
Kirchhoff Industries has a past history of uncollectible accounts, as shown below.
Age Class |
Percent Uncollectible |
|
| Not past due | 1% | |
| 1-30 days past due | 5 | |
| 31-60 days past due | 25 | |
| 61-90 days past due | 35 | |
| Over 90 days past due | 50 |
Estimate the allowance for doubtful accounts, based on the aging of receivables schedule below.
Kirchhoff IndustriesAging of Receivables Scheduleblank
| 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 | 840,000 | 495,600 | 184,800 | 75,600 | 42,000 | 42,000 |
| Conover Industries | 18,100 | 18,100 | ||||
| Keystone Company | 18,200 | 18,200 | ||||
| Moxie Creek Inc. | 6,600 | 6,600 | ||||
| Rainbow Company | 10,000 | 10,000 | ||||
| Swanson Company | 23,100 | 23,100 | ||||
| Total receivables | 916,000 | 518,700 | 194,800 | 82,200 | 60,200 | 60,100 |
| Percentage uncollectible | 1% | 5% | 25% | 35% | 50% | |
| 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 |
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