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 percentages that are estimated as uncollectible. Age Group Accounts Receivable Estimated Loss % 0-30 days past due$ 90,0001% 31-60 days past due20,0002 61-120 days past due11,0005 121-1806,00010 Over 180 days past due4,00025 Total accounts receivable$ 131,000 The balance of the allowance for uncollectible accounts is $520 on December 31, before any adjustments. (a) What amount of bad debts expense will LaFond report in its income statement for the year

Answer 1

LaFond Company

In its income statement for the year, LaFond will report:

Bad Debts Expense = $2,930

Step-by-step explanation:

a) Data and Calculations:

Age Group Accounts Receivable Estimated Loss % Allowance

0-30 days past due $ 90,000 1% $900

31-60 days past due 20,000 2 $400

61-120 days past due 11,000 5 $550

121-180 days past due 6,000 10 $600

Over 180 days past due 4,000 25 $1,000

Total accounts receivable $ 131,000 $3,450

Allowance for Uncollectible Accounts Balance = $520

Bad Debts Expense = $2,930 ($3,450 - $520)