Question

Reporting Uncollectible Accounts and Accounts Receivable

LaFond Company analyzes its accounts receivable at December 31, 2016, and arrives at the aged categories below along with the percentages that are estimated as uncollectible.

Age Group	Accounts Receivable	Estimated Loss %
Current (not past due)	$250,000	0.5%
1–30 days past due	90,000	1.0
31–60 days past due	20,000	2.0
61–120 days past due	11,000	5.0
121–180 days past due	6,000	10.0
Over 180 days past due	4,000	25.0
Total accounts receivable	$381,000

At the beginning of the fourth quarter of 2016, there was a credit balance of $4,350 in the Allowance for Uncollectible Accounts. During the fourth quarter, LaFond Company wrote off $3,830 in receivables as uncollectible.

a. What amount of bad debts expense will LaFond report for 2016?
$Answer

b. What is the balance of accounts receivable that it reports on its December 31, 2016, balance sheet?
$Answer

c. Set up T-accounts for both Bad Debts Expense and for the Allowance for Uncollectible Accounts. Enter any unadjusted balances along with the dollar effects of the information described (including your results from parts a and b).

Bad Debts Expense
(a)	Answer	Answer
Balance	Answer	Answer

Allow. For Uncoll. Accounts
Beg. Bal.	Answer	Answer
Write-off	Answer	Answer
(a)	Answer	Answer
Balance	Answer	Answer

Answer 1

Age Group	Accounts Receivable	Estimated Loss %	Estimated Loss amount
Current (not past due)	250000	0.5%	1250
1–30 days past due	90000	1.0%	900
31–60 days past due	20000	2.0%	400
61–120 days past due	11000	5.0%	550
121–180 days past due	6000	10.0%	600
Over 180 days past due	4000	25.0%	1000
Total accounts receivable	$381,000		4700
Allowance for Uncollectible Accounts unadjusted balance = 4350-3830= $520
a
Bad debts expense = 4700-520 = $4180
b
Balance of accounts receivable = 381000-4700= $376300
c
Bad Debts Expense
(a)	4180
Balance	4180
Allow. For Uncoll. Accounts
Beg. Bal.		4350
Write-off	3830
(a)		4180
Balance		4700