Question

Easy Rider International is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 20Y3, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

Age Interval Balance Percent Uncollectible

Not past due 1,580,000 1%

1-30 days past due    750,000 2

31-60 days past due     100,000 6

61-90 days past due 60,000 14

91-180 days past due 45,000 60

Over 180 days past due 25,000 90

2,830,000

Estimate what the balance of Allowance for Doubtful Accounts should be as of December 31, 20Y3.

Answer 1

Age Interval	Balance	Percent Uncollectible	Allowance for Doubtful Accounts
Not past due	1,850,000	1%	1,850,000 x 1% = 18,500
1-30 days past due	750,000	2%	750,000 x 2% = 15,000
31-60 days past due	100,000	6%	100,000 x 6% = 6,000
61-90 days past due	60,000	14%	60,000 x 14% = 8,400
91-180 days past due	45,000	60%	45,000 x 60% = 27,000
Over 180 days past due	25,000	90%	25,000 x 90% = 22,500
Total			$97,400

balance of Allowance for Doubtful Accounts as of December 31, 20Y3 = $97,400

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