Estimating Doubtful Accounts Outlaw Bike Co. is a wholesaler of motorcycle suppl

Question

Estimating Doubtful Accounts Outlaw 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. Outlaw Bike Co. Estimation of Uncollectible Accounts December 31 Age Class Not past due 1-30 days past due 66,900 2% 31-60 days past due 30,400 7% 61-90 days past due 21,900 17% 91-180 days past due 15,800 38% Over 180 days past due 11,600 65% Balance Percent Uncollectible Estimated Uncollectible Accounts Amount $608,000 1/2% Total $754,600

Explanation / Answer

Q1. Age class Balance %n uncollect Estimated uncollectibe Not past due 608000 0.50% 3040 1-30 d days 66900 2% 1338 31-60 days 30400 7% 2128 61-90 days 21900 17% 3723 91-180 days 15800 38% 6004 Over 180 days 11600 65% 7540 Allowance for doubtful Accounts 23773 Balance in Allowaance for Doubtful accounts: $ 23773 Q2. Age class Balance %n uncollect Estimated uncollectibe Not past due 816000 0.75% 6120 1-30 d days 89800 3% 2694 31-60 days 40800 9% 3672 61-90 days 29400 16% 4704 91-180 days 21200 41% 8692 Over 180 days 15500 80% 12400 Allowance for doubtful Accounts 38282 Bad debts expense for the year Balance required in Allowance account 38282 Add: Debit balance in account 6890 Bad debts expense for the year 45172 Journal entry: Bad debts expense Account Dr. 45172     Allowance for Doubtful Accounts 45172

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