Question

LUKES GENERALSTORE Accounts Receivable - Allowance for Doubtful Accounta Auditor's analytical procedure for Allowance for Doubtful Accounts: Estimated Uncollectible Customer A 750.00 Customer B 1.250.00 Customer C 100.00 Customer D 6.750.00 Customer E 500.00 Customer F 175,00 Auditor's Estimated Uncollectible Amount 1) Calculate and provide the acceptable range for the estimated Allowance for Doubtful Accounts below: 2) Compare to Client's balance of 10.000.00 Is the Client's balance within the acceptable estimated range? 3) is the Client's Allowance for Doubtful Accounts balance adequate? Select Answer

Answer 1

Answer:

1) Auditors estimated uncollectible amount = 9525

Acceptable ranges are,

Maximum = 9525(1+0.05) = 10,001.25

Minimum = 9525(1-0.05) = 9,048.75

Therefore acceptable range for the estimated allowance for doubtful accounts is 9,48.75 to 10,001.25

2) yes, as the clients balance is 10,000 provided for doubtful accounts is within the acceptable range.

3) Yes, the clients allowance for doubtful accounts balance is adequate.

Thank you.