Question

Here is an example of an accounts receivables aging schedule for the same company used above. This company has Sales of $1,200,000 and $100,000 in accounts receivable terms 2/10 n/30 (That's why you see the first line of the aging schedule as 0-10 days.)

Aging of Accounts Receivable Schedule

Age of Account	Amount	% of Total Receivables
0-10 days	$25,000
11-30 days	35,000
31-60 days	20,000
61-90 days	10,000
90+ days	10,000
Total

What percentage of the firms customers are:

Past due -

Within the credit period -

Within the discount period -

Usually, if a customer is over 90 days past due on a bill, that bill is seen as uncollectible or a bad debt. What dollar amount of bad debt would this firm need to write off?

Answer 1

Age of Account	Amount	% of Total Receivables
0-10 days	25000	25%
11-30 days	35000	35%
31-60 days	20000	20%
61-90 days	10000	10%
90+ days	10000	10%
Total	100000	100%
Percentage of the firms customers are:
Past due = 40% (20%+10%+10%)
Within the credit period 35%
Within the discount period 25%
Dollar amount of bad debt to write off = $10000
Note:
Terms 2/10 n/30 indicate discount period is 10 days and credit period is 30 days