Question

49. Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $44,390 and $3,470, respectively. During the year, the company wrote off $2,640 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule:

Number of days	Receivables				% Likely to be
past due	amount				uncollectible
Current		$	71,000			1%
0-30			27,000			5%
31-60			6,860			10%
61-90			3,520			25%
Over 90			3,200			50%
Total		$	111,580

What will Domino record as Uncollectible Accounts Expense for Year 2?

Multiple Choice

• $4,396

• $2,640

• $5,226

• $1,756

Answer 1

	Number of
	Days
	past due
		Receivable	% likely to be		Amount
	current	amounts	uncollctible
	0--30	71,000	1%		710
	31---60	27,000	5%		1350
	61--90	6,860	10%		686
	over 90	3,520	25%		880
	total	3,200	50%		1600
	total estimated bad debts				5226
		T-Account
		Bad debts
	wrote off	2,640	opening	3,470
			adjustment	4396
			balance	5,226
		Answer	$4,396