Question

Williamson Distributors separates its accounts receivable into three age groups for purposes of estimating the percentage of uncollectible accounts. Accounts not yet due = $35,000; estimated uncollectible = 5%. Accounts 1–30 days past due = $10,500; estimated uncollectible = 15%. Accounts more than 30 days past due = $4,500; estimated uncollectible = 25%. Compute the total estimated uncollectible accounts.

Answer 1

Answer:

$4,450

Explanation:

The computation of the total estimated uncollectible accounts is shown below:

= Accounts not yet due × uncollectible percentage + Accounts 1–30 days past due × uncollectible percentage + Accounts more than 30 days past due × uncollectible percentage

= $35,000 × 5% + $10,500 × 15% + $4,500 × 25%

= $1,750 + $1,575 + $1,125

= $4,450