Maverick Company uses the aging method to adjust the allowance for uncollectible
ID: 2394721 • Letter: M
Question
Maverick Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December 31, 2016, the balance of accounts receivable is $220,000 and the allowance for uncollectible accounts has a credit balance of $3,000 (before adjustment). An analysis of accounts receivable produced the following age groups Click to open the accounts receivable aging information.) Based on past experience, Maverick estimates that the percentage of accounts that will prove to be uncollectible within the three age groups is 3%,9%, and 21%, respectively The net receivables on the balance sheet as of December 31, 2016, are The net receivables on the balance sheet isS Data Table Current 150,000 60,000 10,000 220,000 Over 60 days past due.. . Print Done Enter any number in the edit fields and then continue to the next question.Explanation / Answer
first letus calculate the estimated bad debt allowance:
net receivables on balance sheet = balance of receivables - total allowance
=>220,000 - 12,000
=>$208,000.
net receivables on balance sheet is $208,000.
current (150,000 * 3%) 4,500 60 days past due (60,000*9%) 5,400 over 60 days past due (10,000*21%) 2,100 total allowance 12,000