P7-3 solution - PROBLEM 7-3(a The Allowance for Doubtful Accounts should have a balance of $45,000 at year-end The supporting calculations are shown

P7-3 solution - PROBLEM 7-3(a The Allowance for Doubtful...

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PROBLEM 7-3 (a) The Allowance for Doubtful Accounts should have a balance of $45,000 at year-end. The supporting calculations are shown below: Days Account Outstanding Amount Expected Percentage Uncollectible Estimated Uncollectible 0–15 days $300,000 .02 $ 6,000 16–30 days 100,000 .10 10,000 31–45 days 80,000 .15 12,000 46–60 days 40,000 .20 8,000 61–75 days 20,000 .45 9,000 Balance for Allowance for Doubtful Accounts $45,000 The accounts which have been outstanding over 75 days ($15,000) and have zero probability of collection would be written off immediately by a debit to Allowance for Doubtful Accounts for $15,000 and a credit to Accounts Receivable for $15,000. It is not considered when deter-mining the proper amount for the Allowance for Doubtful Accounts. (b) Accounts receivable ($555,000 – $15,000) ........................................................
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  • Fall '08
  • ABOHABIB
  • $40,000, 15 days, $495,000, $555,000, $300,000 16

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