Question

Selby’s Bike Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2016, 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 $1,410,000 0.70% 1 - 30 days past due 470,200 3 31 - 60 days past due 191,900 7 61 - 90 days past due 56,600 10 91 - 180 days past due 36,300 37 Over 180 days past due 24,600 84 $2,189,600 Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2016.

Answer 1

Requirement A Amount Receivable(A) Number of days outstanding Not Past due 1--30 31-60 61-90 91-120 Over 120 # Htttt 1,410,000.00 470,200.00 191,900.00 56,600.00 36,300.00 24,600.00 % uncollectible(B) Estimated amount uncollectibleſ AxB] 0.70% $ 9,870.00 3% $ 14,106.00 7% $ 13,433.00 10% $ 5,660.00 37% $ 13,431.00 84% $ 20,664.00 77,164.00 Allowance for Doubtful accounts As on December 31, 2016