Question

Spade Agency separates its accounts receivable into three age groups for purposes of estimating the percentage of uncollectible accounts. In addition, the balance of Allowance for Uncollectible Accounts before adjustment is $1,000 (credit).

Accounts not yet due = $30,000; estimated uncollectible = 4%.Accounts 1–60 days past due = $15,000; estimated uncollectible = 25%.Accounts more than 60 days past due = $10,000; estimated uncollectible = 50%.

Compute the total estimated uncollectible accounts. Estimated Age Group Amount Uncollectible Not yet due 1-60 days past due More than 60 days past due Total

Answer 1

Answer:

Uncollectible Accounts = $9,950

Explanation:

Uncollectible Accounts in :

Not yet due = $30,000 * 4% = $1,200

1-60 days = $15,000 * 25% = $3,750

more than 60 days due = $10,000 * 50% = $5,000

Total = $9,950

Answer 2

Answer: $9,950

Explanation:

Amount of uncollectibles for the three age groups;

Accounts Not yet due = $30,000, estimated uncollectible = 4%

= $30000 × 0.04 = $1200

Accounts 1–60 days past due = $15,000; estimated uncollectible = 25%

= $15000 × 0.25 = $3750

Accounts more than 60 days past due = $10,000; estimated uncollectible = 50%

= $10000 × 0.5 = $5000

Total = $1200 + $3750 + $5000 = $10,950

Accounting for the balance of Allowance for Uncollectible Accounts before adjustment; credit of $1000

$10,950 - $1000 = $9950