Question

Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $47,270 and $3,740, respectively. During the year, the company wrote off $2,790 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule:

Number of days past due	Receivables	% Likely to be uncollectible
Current	$80,000	1%
0-30	29,100	5%
31-60	7,760	10%
61-90	4,120	25%
Over 90	3,800	50%
Total	$124,780

What will Domino record as Uncollectible Accounts Expense for Year 2?

Answer 1

Calculate estimated uncollectible account :

Number of days past due	Receivables	% Likely to be uncollectible	Estimated uncollectible account
Current	80000	1%	800
0-30	29100	5%	1455
31-60	7760	10%	776
61-90	4120	25%	1030
Over 90	3800	50%	1900
Total	124780		5961

Uncollectible account expense = 5961-(3740-2790) = $5011

Domino record as uncollectible accounts expense for year 2 = $5011