Question

On December 31, 2017, Toro Company’s Allowance for Doubtful Accounts had an unadjusted credit balance of $31,000. The accountant for Toro has prepared a schedule of the December 31, 2017, accounts receivable by age and, on the basis of past experience, has estimated the percentage of the receivables in each age category that will become uncollectible. This information is summarized as follows:

December 31, 2017 Accounts Receivable	Age of Accounts Receivable	Expected Percentage Uncollectible
$1,510,000	Not due (under 30 days)	1.25%
715,000	1 to 30 days past due	2.00
152,000	31 to 60 days past due	6.50
97,000	61 to 90 days past due	33.00
25,000	Over 90 days past due	68.00

Required:
1. Calculate the amount that should appear in the December 31, 2017, balance sheet as the allowance for doubtful accounts.

Answer 1

Ans:

Calculation of amount that should appear in the balance sheet of Dec 31 2017:

Account receivable (A)	Age of account receivable	% of allowance (B)	Allowance for doubtfull debts (A*B)
$1,510,000	Not due (under 30 days)	1.25%	$18,875
$715,000	1 to 30 days past due	2.00%	$14,300
$152,000	31 to 60 days past due	6.50%	$9,880
$97,000	61 to 90 days past due	33.00%	$32,010
$25,000	Over 90 days past due	68.00%	$17,000
		Total Allowance	$92,065

So the amount that should appear in Balance sheet as uncollectible is $92,065.

For any query please ask in comment box, we are happy to help you. Also please don't forget to provide your valuable feedback. Thanks!