XYZ Company had a $4,000 credit balance in its allowance for bad debts at Januar
ID: 2387185 • Letter: X
Question
XYZ Company had a $4,000 credit balance in its allowance for bad debts at January 1, 2002.At December 31, 2002, XYZ Company prepared the following aging schedule:
Accounts Receivable % Uncollectible
not past due $120,000 2%
1-30 days past due 40,000 5%
31-60 days past due 30,000 8%
61-90 days past due 10,000 15%
over 90 days past due 2,000 50%
Based on the above information, XYZ Company reported bad debt expense of $8,200 for 2002.
Calculate the amount of accounts receivable written off as uncollectible by XYZ Company during 2002.
Explanation / Answer
Aging of A/R is pretty straightforward actually. Find how much your A/R balance is based on the aging method. 120000 * .02 + 40000 * .05 + 30000 * .08 + 10000 * .15 + 2000 * .50 = 9300 Our total allowance for doubtful accounts, then, is 4000 (already there) + 9300 (new) = 13300. If the bad debt expense turns out to be 8200, however, then the difference between 13300 are our write-offs -- 5100. If it helps, make a T-account for allowance for doubtful accounts. 4000 is a credit, 9300 is a credit, 5100 is a debit, and this adds up to a total credit balance of 8200.
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