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Estimating Doubtful Accounts
Performance Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:
Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.
Performance Bike Co.
Estimation of Uncollectible Accounts
Age Interval Balance Estimated Uncollectible Accounts Percent Estimated Uncollectible Accounts Amount
Not past due $636,000 3/4% $
1-30 days past due 70,000 4%
31-60 days past due 31,800 8%
61-90 days past due 22,900 16%
91-180 days past due 16,500 41%
Over 180 days past due 12,100 65%
Total $789,300 $
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