Preparing an Aging Schedule to Estimate Allowance for Doubtful Accounts
A review of open invoices of Sketchers Inc. results in the following report.
Invoice |
Amount |
Date (Each from this year) |
---|---|---|
#496 | $254.71 | 5-Dec |
#495 | 380.99 | 2-Dec |
#427 | 152.31 | 5-Nov |
#100 | 60.59 | 28-Jun |
#300 | 411.91 | 3-Oct |
#410 | 372.37 | 31-Oct |
#204 | 34.83 | 25-Aug |
#498 | 422.69 | 28-Dec |
#499 | 153.42 | 28-Dec |
#487 | 415.16 | 28-Nov |
#310 | 115.36 | 8-Oct |
#178 | 357.34 | 7-Aug |
#497 | 186.13 | 5-Dec |
#488 | 79.39 | 29-Nov |
#105 | 10.41 | 5-Jul |
$3,407.61 |
Required
a. Organize the list of open invoices as of December 31 into a table with the following aging categories across the top: (1) less than 30 days, (2) 31–60 days, (3) 60–90 days, and (4) greater than 90 days.
b. Assume that the company estimates the allowance for doubtful accounts based upon the following percentages applied to the appropriate aging categories: (1) 1% for less than 30 days, (2) 5% for 31–60 days, (3) 30% for 60–90 days, and (4) 60% for greater than 90 days. What is the ending allowance for doubtful accounts as estimated by the company?
Complete the following table to complete requirements of parts a and b.
Note: Round each dollar amount to two decimal places.
Less than 30 days |
31-60 Days |
60-90 Days |
Greater than 90 Days |
Total | |
---|---|---|---|---|---|
Total Receivables | Answer | Answer | Answer | Answer | Answer |
Percentage | Answer | Answer | Answer | Answer | |
Estimated Uncollectibles | Answer | Answer | Answer | Answer | Answer |
Solution:
Table:
31-60 Days | 60-90 Days | Greater than | Total | ||
Less than | 90 Days | ||||
30 days | |||||
Total Receivables | $ 1,397.94 | $ 646.86 | $ 899.64 | $ 463.17 | $ 3,407.61 |
Percentage | 1% | 5% | 30% | 60% | |
Estimated Uncollectibles | $ 13.98 | $ 32.34 | $ 269.89 | $ 277.90 | $ 594.12 |
Estimated Ending allowance for Doubtful Accounts | $ 594.12 |
Working:
31-60 Days | 60-90 Days | Greater than | Total | ||
Less than | 90 Days | ||||
30 days | |||||
Total Receivables | 254.71+380.99+422.69+153.42+186.13 | 152.31+415.16+79.39 | 411.91+372.37+115.36 | 60.59+34.83+357.34+10.41 | $ 3,407.61 |
Percentage | 1% | 5% | 30% | 60% | |
Estimated Uncollectibles | $ 13.98 | $ 32.34 | $ 269.89 | $ 277.90 | $ 594.12 |
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