Twilight Company uses the aging of accounts recelvable method to ostimate Bnd Debt Expense. The batance of each account recelveble is eged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days. old. Besed on expenence, manogement hos estimated what portion of recelvables of a specific age will not be pald as foltows: (1) 1\%, (2)15%, and (3)40%, respectively. At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtrul Accounts was$80. The total Accounts Recelvable in each oge category were: (1) 1.30 days old,$52,000. (2)31−90days old,$8,000, ond (3) more than 90 days old, $3,200 Required: a. Colculate the estimate of uncollectible accounts ot December 31, 2019.
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.
Twilight Company uses the aging of accounts recelvable method to ostimate Bnd Debt Expense. The batance of each account recelveble is eged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days. old. Besed on expenence, manogement hos estimated what portion of recelvables of a specific age will not be pald as foltows: (1) 1\%, (2)15%, and (3)40%, respectively. At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtrul Accounts was$80. The total Accounts Recelvable in each oge category were: (1) 1.30 days old,$52,000. (2)31−90days old,$8,000, ond (3) more than 90 days old, $3,200 Required:
a. Colculate the estimate of uncollectible accounts ot December 31, 2019.
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