Chapter 9, Problem 2JC

To determine

The assessment of amount of the allowance for doubtful accounts receivables.

Given information:

Data for Y2

Sales for the Y2 are $370, 00,000.

Total receivables for Y2 are $67,000,000.

In 0-30 days ageing category receivables are $15,000,000 with uncollectible 4%.

In 31-60 days ageing category receivables are $27,000,000 with uncollectible 10%.

In 61-90 days ageing category receivables are $10,000,000 with uncollectible 30%.

In 91-120 days ageing category receivables are $5,000,000 with uncollectible 40%.

In Over 120 days ageing category receivables are $10,000,000 with uncollectible 80%.

Data for Y1

Sales for the Y2 are $420, 00,000.

Total receivables for Y1 are $48,000,000.

In 0-30 days ageing category receivables are $30,000,000 with uncollectible 1%.

In 31-60 days ageing category receivables are $8,000,000 with uncollectible 7.5%.

In 61-90 days ageing category receivables are $4,000,000 with uncollectible 20%.

In 91-120 days ageing category receivables are $2,000,000 with uncollectible 40%.

In Over 120 days ageing category receivables are $4,000,000 with uncollectible 45%.