Question

The Physical Therapy Center specializes in helping patients regain motor skills after serious accidents. The center has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $107,000; Allowance for Uncollectible Accounts = $3,700 (debit). The center estimates uncollectible accounts based on an aging of accounts receivable as shown below. Age Group Not yet due 0–60 days past due 61-120 days past due More than 120 days past due Total Estimated Percent Amount Receivable Uncollectible $ 57,000 4% 25,700 20% 15,700 30% 8,600 85% $ 107,000 Required: 1. Estimate the amount of uncollectible receivables. Age Group Estimated Amount Uncollectible Not yet due 0-60 days past due 61-120 days past due More than 120 days past due Total

Answer 1

Estimated Amount Uncollectible $2,200 Age Group Not yet due 0-60 days past due 61 - 120 days past due More than 120 days past Total $5,140 $ 4,710 $7,310 $19,440 due Calculation: Estimated Amount Uncollectible = (Amount Receivable x Estimated Percent Uncollectible) Not yet due - $57,000 X 4% = $2,200 0-60 days past due = $25,700 x 20% = $5,140 61-120 days past due = $15,700 x 30% = $4,710 More than 120 days past due = $8,600 x 85% = $7,310 Credit Debit $23,140 Date General Journal Dec. 31,2021 Bad debt expense Allowance for uncollectible accounts (To record uncollectible accounts). $23,140 Calculation: Bad debt expense = (Total Estimated Amount Uncollectible + Allowance for Uncollectible accounts) $19,440+ $3,700 = $23,140

Total accounts receivable les: Allowance for uncollectible accounts $ 107,ooo $ 19440 Net Accounts Receivable $ 87,560 Calculation: Allowance for uncollectible in part (1) accounts are calculated