Question

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 $43,430 and $3,380, respectively. During the year, the company wrote off $2,590 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 $ 68,000 1% 0-30 26,300 5% 31-60 6,560 10% 61-90 3,320 25% Over 90 3,000 50% Total $ 107,180
What will Domino record as Uncollectible Accounts Expense for Year 2?

a. $4,191

b. $1,601

c. $4,981

d. $2,590

Answer 1

Answer:

a. $4,191

Explanation:

The computation is shown below:

Number of days Receivables %  Uncollected amount

Current              $68,000    1%        $680

0-30 days      $26,300    5% $1,315

31-60 days      $6,560    10% $656

61-90 days      $3,320     25% $830

Over 90 days     $3,000      50% $1,500

Total             $107,180          $4,981

Now

Allowance for doubtful balance after write off =is

= $3,380 - $2,590 = $790

So,  

Uncollectible account expense  is

= $4,981 - $790

= $4,191