Question: Flossmoor Company uses the accounts receivable aging method to estimate

Flossmoor Company uses the accounts receivable aging method to estimate uncollectible accounts. At the beginning of the year, the balance of the Accounts Receivable account was a debit of $88,430, and the balance of Allowance for Uncollectible Accounts was a credit of $7,200. During the year, the company had sales on account of $473,000, sales returns and allowances of $4,200, worthless accounts written off of $7,900, and collections from customers of $450,730. At the end of year (December 31, 2014), a junior accountant for Flossmoor was preparing an aging analysis of accounts receivable. At the top of page 6 of the report, the following totals appeared:

To finish the analysis, the following accounts need to be classified:

From past experience, the company has found that the following rates are realistic for estimating uncollectible accounts:
Percentage Considered
Time Uncollectible
Not yet due ......... 2
1–30 days past due ..... 5
31–60 days past due ...... 15
61–90 days past due ...... 25
Over 90 days past due .... 50

1. Complete the aging analysis of accounts receivable.
2. Compute the end-of-year balances (before adjustments) of Accounts Receivable and Allowance for Uncollectible Accounts.
3. Prepare an analysis computing the estimated uncollectible accounts. (Round to the nearest dollar.)
4. Calculate Flossmoor’s estimated uncollectible accounts expense for the year. (Round to the nearest whole dollar).
5. What role do estimates play in applying the aging analysis? What factors might affect theseestimates?
View Solution:

Sale on SolutionInn
  • CreatedMarch 26, 2014
  • Files Included
Post your question