Question

For sales on aged collectables, my question is just saying one percent of AR will not be collectable.....it is not saying the remaining portion is not collectable. Do I assume it's for the end of final collectable to figure, or do I split both aged collectables with a deficit of .5

Answer 1

Hey, If its saying 1% of of AR will not be collectable, that means 1% of the total receivables is not collectible. So you can figure out the amount by multiplying the total receivables figure with 1%.

Also, please note that if there is any balance in allowance for doubtful accounts, thats need to be adjusted wit the above calculated figure to get the amount for which the adjusting entry at year end is done. If debit balance is there in this account its get added to the above 1% calculated figure and if credit balance is there it should be subtracted to get the right amount of adjustment to be made.