Aging of Accounts Receivable The Miller Company’s accounts receivable reveal the
ID: 2493308 • Letter: A
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 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 expenseExplanation / Answer
Age of Acccount (In days) Receivable Balance Prob. Of Non-Collection Amt. Uncollectible 0 - 30 800,000 0.50% 4,000 31-60 180,000 1.00% 1,800 61-90 80,000 10.00% 8,000 91-120 40,000 70.00% 28,000 Total 1,100,000 41,800 Ending Balance of Allowance for for Uncollectible accounts = $41800 Bad Debt Exp. = $41800 - $34200 = $7600 Journal Entry to be passed for Bad Debt Exp. is: Bad Debt Dr. 7,600.00 To Allowance for Uncollectible A/c 7,600.00