Estimating Doubtful Accounts Performance Bike Co. is a wholesaler of motorcycle

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 Estimated Uncollectible Estimated Uncollectible Accounts Amount Age Interva Balance Accounts Percent Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due $918,000 101,000 45,900 33,000 23,900 17,400 $1,139,200 1/2% 496 9% 18% 41% 70% Total

Explanation / Answer

Estimated uncollectible accounts

Age interval Balance Estimated uncollectible accounts percent Estimated uncollectible accounts amount Not past due 918000 1/2% 4590 1-30 days past due 101000 4% 4040 31-60 days past due 45900 9% 4131 61-90 days past due 33000 18% 5940 91-180 days past due 23900 41% 9799 Over 180 days past due 17400 70% 12180 Total 1139200 40680

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