Question

Aging Method Information	Current	0 - 30 Days Past Due	31 - 60 Days Past Due	61 - 90 Days Past Due	> 90 Days Past Due	Total
Amount
Past experience ratio

Past experience ratio for % of sales method
Facts:
Accounts receivable balance (beg)
Sales on account
Collections on account
Write-offs of accounts receivable
Accounts receivable balance (end)
Percentage of Sales Method
Allowance for uncollectible accounts (beg)
Write-offs of accounts receivable
Uncollectible accounts expense
Allowance for Uncollectible accounts (end)
Aging Method
Allowance for uncollectible accounts (beg)
Write-offs of accounts receivable
Uncollectible accounts expense

  Rosey's Roses had sales on account of $345,000, collections of $337,000 write-offs of $3,700, a beginning balance in accounts receivable of $37,000, and a beginning balance in the allowance for uncollectible accounts of $1,200. At year end, $34,000 of accounts receivable were current, $4,900 were 0-30 days past due, and $400 were over 90 days past due. The company believes 1.0 percent of sales will not be collected. They also have experience suggesting that 3% of all current receivables, 5% of receivables 0-30 days past due, 15 percent of receivables 31-60 days past due, 20 percent of receivables 61-90 days past due, and 40% of receivables over 90 days past due will not be collected. Use the third worksheet of the workbook to answer this problem: a. Complete an allowance for uncollectible accounts analysis using the percentage of sales method. b. Complete an allowance for uncollectible accounts analysis using the aging method. Need to show formulas in excel

Answer 1

Explanation and Facts of the problem:

In this scenario, we will use two ways to estimate the bad debts expense amount 1. Percentage of sales method 2. Aging of Accounts receivable Facts Accounts receivable balance (beg) Sales on account Collections on account Write-offs of accounts receivable Accounts receivable balance (end) Amount $37,000 $ 3,45,000 $ 3,37,000 $3,700 $39,300 (34,000+ 4,900+400)

Percentage of Sales method for estimating uncollectible amount as well as Aging data:

Percentage of sales method Uncollectible account expense Current period sales* Bad debt % Allowance for uncollectible accounts beg) Write-offs of accounts receivable$ Uncollectible accounts expense 345,000*196) Allowance for Uncollectible accounts (end) 1,200 3,700 3,450 950 (1200 3700 3,450) 31 60 61-90 0 30 Days Days Past Days Past> 90 Days Past Due Due Aging Method Information Amount Past experience ratio Uncollectible accounts expense Calculation Current Due Past Due Total S 34,000 $ 4 4,900 $ $ 400 $ 40% 39,300 3% 15% 5% 1,020 245 (34000#396) 14900*596) 20% $ 160 (400*4096) 1,425

Aging Method for calculating uncollectible accounts expense: