Chapter 9, Problem 2P

Techno Designs Store uses the accounts receivable aging method to estimate uncollectible accounts. On February 1, 2014, the balance of the Accounts Receivable account was a debit of $442,341, and the balance of Allowance for Uncollectible Accounts was a credit of $43,700. During the year, the store had sales on account of $3,722,000, sales returns and allowances of $60,000, worthless accounts written off of $44,300, and collections from customers of $3,211,000. As part of the end-of-year (January 31, 2015) procedures, an aging analysis of accounts receivable is prepared. The analysis, which is partially complete, follows.

To finish the analysis, the following accounts need to be classified:

From past experience, the company has found that the following rates are realistic for estimating uncollectible accounts:

REQUIRED

1. 1. Complete the aging analysis of accounts receivable.
2. 2. Compute the end-of-year balances (before adjustments) of Accounts Receivable and Allowance for Uncollectible Accounts.
3. 3. Prepare an analysis computing the estimated uncollectible accounts. (Round to the nearest whole dollar.)
4. 4. How much is Techno Designs Store’s estimated uncollectible accounts expense for the year? (Round the adjustment to the nearest whole dollar.)
5. 5. What role do estimates play in applying the aging analysis? What factors might affect these estimates?