Question

On December 31, Jarden Co.'s Allowance for Doubtful Accounts has an unadjusted credit balance of $14,500. Jarden prepares a schedule of its December 31 accounts receivable by age.

Accounts Receivable		Age of Accounts Receivable	Expected Percent Uncollectible
$	880,000	Not yet due	1.20	%
	352,000	1 to 30 days past due	1.95
	70,400	31 to 60 days past due	6.45
	35,200	61 to 90 days past due	32.50
	14,080	Over 90 days past due	67.00

Required:
1. Compute the required balance of the Allowance for Doubtful Accounts at December 31.

Answer 1

Age	acc recevable	%uncollectable	amount $
Not due	880000	1.2%	10560
1-30	352000	1.95%	6864
30-60	70400	6.45%	4540.8
60-90	35200	32.5%	11440
>90	14080	67%	9433.6

Total 42838.4

The required balance of allowance for Doubtful Accounts = $ 42,838.4

Further allowance to be created for $ 28338.4, since there is a balance of $14500 in the account.