Mercy Hospital has the following balances on December 31, 2024, before any adjustment: Accounts Receivable = $70,000; Allowance for Uncollectible Accounts = $1,400 (credit). Mercy estimates uncollectible accounts based on an aging of accounts receivable as shown below. Age Group Amount Receivable Estimated Percent Uncollectible Not yet due $50,000 15% 0 to 30 days past due 11,000 20% 31 to 90 days past due 8,000 45% More than 90 days past due 1,000 85% Total $70,000 Required: 1. Estimate the amount of uncollectible receivables. 2. Record the adjusting entry for uncollectible accounts on December 31, 2024. 3. Calculate net accounts receivable reported in the balance sheet.
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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.
Mercy Hospital has the following balances on December 31, 2024, before any adjustment:
| Age Group | Amount Receivable | Estimated Percent Uncollectible |
|---|---|---|
| Not yet due | $50,000 | 15% |
| 0 to 30 days past due | 11,000 | 20% |
| 31 to 90 days past due | 8,000 | 45% |
| More than 90 days past due | 1,000 | 85% |
| Total | $70,000 |
Required:
1. Estimate the amount of uncollectible receivables.
2. Record the
3. Calculate net accounts receivable reported in the
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