Question

6-22. Estimating Uncollectible Accounts and Reporting Accounts Receivable LaFond Company analyzes its accounts receivable at December 31, and arrives at the aged categories below along with the percentages that are estimated as uncollectible. Age Group 0-30 days past due 31-60 days past due 61-120 days past due. 121-180 days past due Over 180 days past due.. Total accounts receivable... Accounts Receivable $ 90,000 20,000 11,000 6,000 4,000 $131,000 Estimated Loss % 1% 2 5 10 25 The unused balance of the allowance for uncollectible accounts is $520 on December 31, before any adjustments a. What amount of bad debts expense will LaFond report in its income statement for the year? b. Use the financial statement effects template to record LaFond's bad debts expense for the year. c. What is the balance of accounts receivable on its December 31 balance sheet?

Answer 1

Requirement (1) Age group Accounts Receivable Esitmated loss (%) Uncollectible Amount 0-30 days $ 90,000 1% $ 900 31-60 days $ 20,000 2% $ 400 61-120 days $ 11,000 5% $ 550 121-180 days $ 6,000 10% $ 600 Over 180 days $ 4,000 25% $ 1,000 Total Amount of Uncollectible $ 3,450 Less : Credit Balance in allowance for doubtful accounts $ (520) Bad Debt Expense to be reported $ 2,930

Requirement (2) Transaction Record bad debt Expense Cash Asset $ Balance Sheet + Non Cash asset = Liabilities $ (2,930) $ + Contributed Capital + Earned Capital $ $ (2,930) Revenue Income Statement Expense = Net Income 0 $ 2,930 = $ (2,930) Requirement (3) Balance of Accounts Receivable 131000-2930 $ 128,070 Note : Do Comment For Any Issues

Answer 2

balance for A/R is 131,000- 3,450 = 127550