
Concept Introduction:
Aging method of
Aging method is a technique which is used to compute the balance in allowance for doubtful accounts. In this method all the accounts receivables are categorized into different accounts on the basis of period for which they are outstanding.
Allowance for doubtful debt is calculated by using expected percentage of uncollectible given for each category of account receivable.
Requirement 1-
To compute:
Amount of anticipated balance of allowance of doubtful debt.

Answer to Problem 6BTN
Solution:
December 31, 2015 Accounts receivable | Age of Accounts receivable | Expected percentage of uncollectible | Allowance for doubtful debt |
$830,000 | Not yet due | 1.25% | $10,375 |
$254,000 | 1-30 days past due | 2% | $5,080 |
$86,000 | 31-60 days past due | 6.50% | $5,590 |
$38,000 | 61-90 days past due | 32.75% | $12,445 |
$12,000 | Over 90 days past due | 68% | $8,160 |
1,220,000 | $41,650 |
Explanation of Solution
Accounts receivable, Age of Accounts receivable and expected percentage of uncollectible was already given in the question.
We need to calculate the Allowance for doubtful debt-
Total amount of Allowance for doubtful debt-
Thus, amount of allowance of doubtful debt ascertained is $41,650.
Requirement 2-
To prepare:
The

Answer to Problem 6BTN
Solution:
Date | Account titles and description | Debit ($) | Credit ($) |
31-Dec | Bad debt | 27,150 | |
Allowance for doubtful account | 27,150 | ||
(To record anticipated bad debts) |
Explanation of Solution
Given,
• Unadjusted balance = $14,500
• Required allowance balance =$41,650 (calculated in Req.1)
We need to calculate the amount of adjustment to be made to allowance-
Thus, adjusting entry has been passed and ascertained adjustment to allowance is $27,150.
Requirement 3-
To present:
The accounts receivables in

Answer to Problem 6BTN
Solution:
Balance Sheet | |
Particulars | Amount ($) |
Gross Accounts receivable | 1,220,000 |
Less: Bad debts | (41,650) |
Net Accounts receivable | 1,178,350 |
Explanation of Solution
Given,
• Gross Accounts receivable= $1,220,000
• Bad debts= $41,650 (calculated in Req.1)
Calculation of Net accounts receivable is as follows-
Thus, in balance sheet, accounts receivable is shown as net of allowance or bad debt expense and net accounts receivable for December 31, 2015 is $1,178,350.
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Chapter 9 Solutions
Loose Leaf for Fundamental Accounting Principles
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