Question

You have been provided with the following Aging Report to use to adjust the Allowance for Uncollectible Accounts for a company at year end. Age Group Not yet due 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Accounts Receivable $ 88,000 39,000 26,000 20,000 17,000 $190,000 Estimated Percent Uncollectible 5% 10% 20% 40% 80% Allowance for Uncollectible Accounts 2,000 Credit After reviewing the data, you note the 'not yet due category is overstated by 20%, while the 'Over 90 days' category is understated by 20%, (this error also caused the AR balance on the schedule to not equal the amount of Accounts Receivable on the balance sheet). Also, you note the balance in the Allowance account is actually a debit, rather than a credit. Being that the normal balance for this account is a credit, the accountant hadn't noticed the issue. Required: 1. Use your spreadsheet to recalculate the needed adjustment and account balances. What will be the balance in Accounts Receivable and the Allowance for Uncollectible Accounts based on the above information? Accounts Receivable Allowance for Uncollectible Accounts

Answer 1

Solutions:

1
Age Group	Accounts Receivable	% uncollectible	Uncollectibles
Not yet due (102000/120%)	73,333	5%	3667
1-30 days past due	39,000	10%	3900
31-60 days past due	26,000	20%	5200
61-90 days past due	20,000	40%	8000
Over 90 days past due (24000*120%)	20,400	80%	16320
Total	1,78,733		37087
Balance in Accounts Receivable =	1,78,733
Allowance for Uncollectible Accounts =	37087
2
Accounts Title	Debit	Credit
Bad Debt Expense (37087+2000)	39087
Allowance for Uncollectible accounts		39087