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Cindrella uses aging to estimate uncollectibles. Accounts of $150,000 are less than 30 days old (96%...

Cindrella uses aging to estimate uncollectibles. Accounts of $150,000 are less than 30 days old (96% collectible), $80,000 are 30 to 60 days old (85% collectible), $35,000 are 61-120 days old (50% collectible), and the remaining $10,000 is 10% collectible.

Question 12 options:

A)

 The Allowance for Uncollectibles should have a balance of $6,000.

B)

 The Allowance for Uncollectibles should have a balance of $17,500.

C)

 The Allowance for Uncollectibles should have a balance of $44,500.

D)

 The Allowance for Uncollectibles should have a balance of $29,500.

E)

 None of these.
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Answer #1

Balance in allowance for doubtful accounts
= ($150,000 X 4%) + ($80,000 X 15%) + ($35,000 X 50%) + ($10,000 X 90%) = $44,500

The Allowance for Uncollectibles should have a balance of $44,500

Option C.

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