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	$866,000	3/4%	$
1-30 days past due	95,300	2
31-60 days past due	43,300	6
61-90 days past due	31,200	14
91-180 days past due	22,500	41
Over 180 days past due	16,500	70
Total	$1,074,800		$

Answer 1