Vincent Company uses the aging method to adjust the allowance for uncollectible

Question

Vincent Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December 31, the balance of accounts receivable is $200,000 and the allowance for uncollectible accounts has a credit balance of $4,000 (before adjustment). An analysis of accounts receivable produced the following age groups: Based on past experience, Vincent estimates that the percentage of accounts that will prove to be uncollectible within the three age groups is 4%, 10%, and 21%, respectively. Based on these facts, the adjusting entry for uncollectible accounts should be made in the amount of Refer to Question 5-58. The net receivables on the balance sheet is

Explanation / Answer

Uncollectible estimates = (160000x4%) + (32000X 10%) + (8000x 21%)= 11280
Less opening balance 4000
Adjustment amount 7280
Net receivable in balance sheet ( 200000- 11280) = 188720

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