Question

Arundel Company uses aging to estimate uncollectibles.  At the end of the fiscal year, December 31, 2018, Accounts Receivable has a balance that consists of:

Dollar Value	Age of Account	Estimated Collectible
$200,000	< 30 days old	99.5%
60,000	30 to 60 days old	94.5%
40,000	61 to 120 days old	73.0%
7,000	> 120 days old	10.0%

The current unadjusted Allowance for Uncollectible Accounts balance is a debit balance of $2,000 and the Bad Debt Expense accounts has an unadjusted balance of zero. After the adjusting entry is made, what will be the dollar balances in the Allowance for Doubtful Accounts? Round to nearest whole dollar.

Answer 1

Account Receivables	Age of Accounts	Estimated Collectibles %	Estimated Uncollectibles %	Amount of Uncollectibles
$200000	< 30 days old	99.50%	0.50%	$1000
$60000	30 to 60 days old	94.50%	5.50%	$3300
$40000	61 to 120 days old	73.00%	27.00%	$10800
$7000	> 120 days old	10.00%	90.00%	$6300

Total Uncollectible Amount = $1000+$3300+10800+$6300 = $21400

And the Debit balance of Uncollcetible Accounts is $2000

So the balance of Allowance for Doubtful accounts is = $21,400+$2000 = $23,400