On dec 1, 1921, Auditors has a debit balance of $15,000 for the Allowance for Uncollectible Accounts before any year adjustment. Auditors also has the following information for its accounts receivable and the estimated percentages of bad debits for different past due amounts: Age group(days past due): 0-30 Accounts receivable: $500,000 Estimated percent uncollectible: 5% Age group(days past due): 31-60 Accounts receivable: $200,000 Estimated percent uncollectible: 10% Age group(days past due): 61-90 Accounts receivable: $100,000 Estimated percent uncollectible: 20% What is the amount of bad debt expense to be reported by Aditors financial statements for 1921 using the aging method? A. $65,000 B. $15,000 C. $50,000 D. $80,000
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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