Question

Crell Computers categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts.

1. Accounts not yet due = $60,000; estimated uncollectible = 5%.

2. Accounts 1–30 days past due = $15,000; estimated uncollectible = 10%.

3. Accounts 31–60 days past due = $10,000; estimated uncollectible = 20%.

4. Accounts more than 60 days past due = $5,000; estimated uncollectible = 30%.

 

What should be the balance in Crell's allowance for uncollectible accounts?

 

Allowance for uncollectible accounts = _______ 

Answer 1

Allowance for uncollectable accounts = $8,000

Working

Age and amount of Accounts receivable		Estimated percentage Uncollectible	Estimated Amount Uncollectible
Not yet due	$   60,000.00	5%	$     3,000.00
Up to 30 days past due	$   15,000.00	10%	$     1,500.00
31-60 days past due	$   10,000.00	20%	$     2,000.00
Over 60 days past due	$     5,000.00	30%	$     1,500.00
Estimated balance in allowance for doubtful accounts			$     8,000.00