Question

Estimating Doubtful Accounts Performance Bike Co. is a wholesaler of motorcycle supplies. An aging of the...

Estimating Doubtful Accounts

Performance Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.

Performance Bike Co.
Estimation of Uncollectible Accounts
December 31
Age Interval Balance Estimated Uncollectible Accounts Percent Estimated Uncollectible Accounts Amount
Not past due $752,000 1/2% $
1-30 days past due 82,700 3
31-60 days past due 37,600 9
61-90 days past due 27,100 14
91-180 days past due 19,600 38
Over 180 days past due 14,300 70
Total $933,300 $

Homework Answers

Answer #1

Performance Bike Co.

Estimation of Uncollectible Accounts

Dec-31

Age Interval

Balance

Estimated Uncollectible Accounts Percent

Estimated Uncollectible Accounts Amount

[A]

[B]

[C = A x B]

Not past due

$752,000

0.50%

$3,760

1-30 days past due

$82,700

3.00%

$2,481

31-60 days past due

$37,600

9.00%

$3,384

61-90 days past due

$27,100

14.00%

$3,794

91-180 days past due

$19,600

38.00%

$7,448

Over 180 days past due

$14,300

70.00%

$10,010

Total

$933,300

$30,877 = ANSWER

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