Percentage of net credit sales approach assuming bad debts are provided for as 2% of net credit sales. (ii) Ageing of accounts receivable method using the data above.
Credit sales (for year) $965,000
Credit sales returns and allowances (for year) 82,000
Allowance for doubtful debts (30 June 2020) 1,200 CR
Balance
% estimated uncollectable
Accounts not yet due $ 96,450 1%
Accounts overdue:
10-30 days $ 31,230 5%
31-60 days $ 22,760 10%
61-120 days $ 16,540 30%
121 days and over $ 9,372 60%
Total $ 176,352
Using the data in the tables above, present the general
(i) Percentage of net credit sales approach assuming bad debts are provided for as 2% of net credit sales.
(ii) Ageing of accounts receivable method using the data above.
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