Question

Age Group Accounts Receivable Estimated Loss % 0-30 days past due $110,000 1% 31-60 days past due 40,000 2 61-120 days past due 27,000 5 121-180 days past due 14,000 10 Over 180 days past due 9,000 25 Total accounts receivable $200,000 The balance of the allowance for uncollectible accounts is $1,100 on December 31, before any adjustments. (a) What amount of bad debts expense will Collins report in its income statement for the year?

Answer 1

Answer:

The answer is attached below

Explanation:

Answer 2

Answer:

Bad debts expense for the year $ 5,800

Explanation:

Calculation of bad debts as at December 31

Ageing of receivable              Amount            %                     Estimated

                                                     $                                          Uncollectible

                                                                                                          $      

0 - 30 days past due               110,000            1 %                            1,100

31 - 60 days past due               40,000           2 %                             800

61 - 120 days past due              27,000           5 %                           1,350

121 - 180 days past due             14,000           10 %                          1,400

Over 180 days past due            9,000           25 %                         2,250  

Totals                                        200,000                                           6,900

The required balance for allowance for uncollectible accounts is $ 6,900

Existing balance in allowance for uncollectible accounts               $ 1,100

Bad Debts expenses for the year                                                    $ 5,800