Teal Mountain Inc. determines that at the end of December, they have the following aging schedule of Accounts Receivable: Customer K. Perry J. Montgomery C. Klein C. Sheen % Uncollectible Total $700 400 180 300 ? Not yet due 200 300 500 1 % Number of Days Past Due Total estimated uncollectible accounts $ 1-30 $400 400 5 % 31-60 $300 50 350 10 % 61-90 200 200 25 % Over 90 130 130 50 % Compute the total estimated uncollectible accounts based on the above information at the end of December.
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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