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	$716,000	3/4%	$
1-30 days past due	78,800	4
31-60 days past due	35,800	6
61-90 days past due	25,800	16
91-180 days past due	18,600	40
Over 180 days past due	13,600	65
Total	$888,600		$

Answer 1

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	$716,000	3/4%	$5370
1-30 days past due	78,800	4	3152
31-60 days past due	35,800	6	2148
61-90 days past due	25,800	16	4128
91-180 days past due	18,600	40	7440
Over 180 days past due	13,600	65	8840
Total	$888,600		$31078