Young and Old Corporation (YOC) uses two aging categories to estimate uncollectible accounts. Accounts less than 60 days are considered young and have a 5% uncollectible rate. Accounts more than 60 days are considered old and have a 40% uncollectible rate. Required: 1. If YOC has $100,000 of young accounts and $400,000 of old accounts, how much should be reported in the Allowance for Doubtful Accounts? 2. If YOC's Allowance for Doubtful Accounts currently has an unadjusted credit balance of $40,000, how much should be credited to the account? 3. If YOC's Allowance for Doubtful Accounts has an unadjusted debit balance of $5,000, how much should be credited to the account?
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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![E8-6 (Static) Computing Bad Debt Expense Using Aging of Accounts Receivable Method [LO 8-2]
Young and Old Corporation (YOC) uses two aging categories to estimate uncollectible accounts. Accounts less than 60 days are
considered young and have a 5% uncollectible rate. Accounts more than 60 days are considered old and have a 40% uncollectible
rate.
Required:
1. If YOC has $100,000 of young accounts and $400,000 of old accounts, how much should be reported in the Allowance for Doubtful
Accounts?
2. If YOC's Allowance for Doubtful Accounts currently has an unadjusted credit balance of $40,000, how much should be credited to
the account?
3. If YOC's Allowance for Doubtful Accounts has an unadjusted debit balance of $5,000, how much should be credited to the account?
1. Amount to be Reported
2. Amount to be Credited
3. Amount to be Credited](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d737f46-feb2-4037-9fd1-b27ad7c9a601%2F03f8a564-319e-4ae2-9f68-41835fb3c0b6%2Flgapm4b_processed.jpeg&w=3840&q=75)
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