Question

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		$

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