Homework SourseDomino Company uses the aging of accounts receivable method
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
What will Domino record as Uncollectible Accounts Expense for Year 2?
| 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 |
Solution
Calculate estimated uncollectible account :
Uncollectible account expense = 5961-(3740-2790) = $5011
Domino record as uncollectible accounts expense for year 2 = $5011
| 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 | |
