The Miller Company’s accounts receivable reveal the following balances by age category:

The allowance for uncollectible accounts has an existing positive balance of \($34,200\). The company’s internal auditors suggest that the following percentages be used to estimate the amount of outstanding receivables that will eventually prove to be uncollectible.

Required
1. Calculate the projected new balance for

(a) the allowance for uncollectible accounts and

(b) the bad debt expense.
2. Why is there an existing balance of \($34,200\) in the allowance for uncollectible accounts? What could be inferred if the existing balance in the allowance for uncollectible accounts was a negative balance of \($34,200\)?

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Age of Account 0-30 days. 31-60 days. 61-90 days.. 91-120 days. Receivable Balance $ 800,000 180,000 80,000 40,000 $1,100,000