Domino Company uses the aging of accounts receivable method to estimate uncollec

Question

Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $47,270 and $3,740, respectively. During the year, the company wrote off $2,790 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule:

Number of days past due

What will Domino record as Uncollectible Accounts Expense for Year 2?

Number of days past due

Receivables % Likely to be uncollectible Current $80,000 1% 0-30 29,100 5% 31-60 7,760 10% 61-90 4,120 25% Over 90 3,800 50% Total $124,780

Explanation / Answer

Calculate estimated uncollectible account :

Uncollectible account expense = 5961-(3740-2790) = $5011

Domino record as uncollectible accounts expense for year 2 = $5011

Number of days past due Receivables % Likely to be uncollectible Estimated uncollectible account Current 80000 1% 800 0-30 29100 5% 1455 31-60 7760 10% 776 61-90 4120 25% 1030 Over 90 3800 50% 1900 Total 124780 5961

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