Aging of Accounts Receivable The Miller Company’s accounts receivable reveal the

Question

Aging of Accounts Receivable The Miller Company’s accounts receivable reveal the following balances by age category: Probability of Age of Account Receivable Balance Non-Collection 0–30 days $800,000.00 0.5% 31–60 days $180,000.00 1.0% 61–90 days $80,000.00 10.0% 91–120 days $40,000.00 70.0% 1,100,000 The allowance for uncollectible accounts has an existing balance of $34,200. Calcualte the bad debt expense and dollar value for the uncollectible accounts based on the probabilities of non-colleciton Allow. for uncollectible accounts Bad debt expense

Explanation / Answer

Computation of bad debt expenses based on given probabilities

Ageing 0-30 days 31-60 days 61-90 days 91-120days Total Balance 800,000 180,000 80,000.00 40000 1,100,000 Probability 0.50% 1% 10% 70% bad debt expenses 4000 1800 8000 28000 41,800

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