At December 31, Sunil Company had a balance of ($ 522,000) in its accounts receivable and an
Question:
At December 31, Sunil Company had a balance of \(\$ 522,000\) in its accounts receivable and an unused balance of \(\$ 3,700\) in its allowance for uncollectible accounts. The company then aged its accounts as follows:
The company has experienced losses as follows: \(1 \%\) of current balances, \(5 \%\) of balances 1-60 days past due, \(15 \%\) of balances \(61-180\) days past due, and \(40 \%\) of balances over 180 days past due. The company continues to base its allowance for uncollectible accounts on this aging analysis and percentages.
a. What amount of bad debts expense does Sunil report on its income statement for the year?
b. Show how Sunil's December 31 balance sheet will report the accounts receivable and the allowance for uncollectible accounts.
Step by Step Answer:
Financial And Managerial Accounting For MBAs
ISBN: 9781618533593
6th Edition
Authors: Peter D. Easton