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 $45,930 and $3,620, respectively. During the year, the company wrote off $2,720 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 $ 76,000 1% 0-30 28,100 5% 31-60 7,360 10% 61-90 3,820 25% Over 90 3,500 50% Total $ 118,780 What will Domino record as Uncollectible Accounts Expense for Year 2?

Answer 1

Answer:

The uncollectible accounts expense for the year is $ 4.706

Explanation:

Computation of required uncollectible accounts balances

Age of receivable       Amount        % estimated as              Amount

                                          $               Uncollectible                  Uncollectible

                                                                                                            $

Current                       76,000                  1 %                                    760

0 - 30 days                 28,100                   5 %                                1,405

31 - 60 days                  7,360                10 %                                    736

61 - 90 days                  3,820                25 %                                   955

over 90 days                3,500                50 %                                 1,750

Totals                          118,780                                                         5,606

Opening balance of allowance for doubtful accounts                  3,620

Less: Write off during the year                                                        2,720

Balance of allowance for doubtful account after write off               900

Required balance of allowance for doubtful account                     5,606

UncollectIble accounts expenses ( $ 5,606- $ 900 )                   $ 4,706