Question

Estimating Uncollectible Accounts and Reporting Accounts Receivable LaFond Company analyzes its accounts receivable at December 31, and arrives at the age categories below along with the percentage uncollectible. Accounts Estimated Age Group Receivable Loss % 0-30 days past due $ 80,000 1% 31-60 days past due 20,000 61-120 days past due 14,000 5 121-180 days past due 6,000 10 Over 180 days past due 4,000 25 Total accounts receivable $124,000 2 The balance of the allowance for uncollectible accounts is $450 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. Use negative signs with your answers, when appropriate Balance Sheet Noncash Contributed Earned Transaction Cash Asset + Assets = Liabilities + Capital Capital Revenue Record bad debts expense Income Statement Expenses - Net Income (c) What is the balance of accounts receivable on it December 31 balance sheet?

Answer 1

Computation of Allowance for uncollectable Account Ageing ) Percentage Antoliedaue Requined Allowage daus) $ 800 0-30 2%, 31-60 Account. Recievable 80000 $ 20,000 14,000 $ 6000 $ 4000 5% Go-120 yoo 700 600 10% SI 124 -180 1000 $ 3500 $ 124,000 a) Amount q in income bad debt expense to be reported statement = = Required balance in allowence account Onsting bansane = $3500 - $450 $3050 Balance Sheet - liabilities + conhlbered Capital & Gearned copata Transaction cash + non cam Assets + - 3050 3050 Record bad deb enance income statement Revenue Expense ner inowe 3050 o -13050 Balance of Accounts on Dec 31 B/s - Cross Decevable - Allowance for doubtful accountal $ 124,000 - 13500 - $ 120500