Estimating Uncollectible Accounts and Reporting Accounts ReceivableCollins Company analyzes its accounts receivable at December 31, and arrives at the aged categories below along with the percentages that are estimated as uncollectible. Age GroupAccountsReceivableEstimatedLoss %0-30 days past due$110,0001%31-60 days past due40,000261-120 days past due27,0005121-180 days past due14,00010Over 180 days past due9,00025Total accounts receivable$200,000   The balance of the allowance for uncollectible accounts is $1,100 on December 31, before any adjustments. (a) What amount of bad debts expense will Collins report in its income statement for the year?$Answer?(b) Use the financial statement effects template to record Collin's bad debts expense for the year.Use negative signs with your answers, when appropriate. Balance SheetTransactionCash Asset+NoncashAssets=Liabilities+ContributedCapital+EarnedCapital Record bad debts expenseAnswer  Answer  Answer  Answer  Answer   Income StatementRevenue-Expenses=Net IncomeAnswer  Answer  Answer (c) What is the balance of accounts receivable on it December 31 balance sheet?$Answer?

Question
Asked Sep 29, 2019
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Estimating Uncollectible Accounts and Reporting Accounts Receivable
Collins Company analyzes its accounts receivable at December 31, and arrives at the aged categories below along with the percentages that are estimated as uncollectible.

 

Age Group

Accounts

Receivable

Estimated

Loss %

0-30 days past due $110,000 1%
31-60 days past due 40,000 2
61-120 days past due 27,000 5
121-180 days past due 14,000 10
Over 180 days past due 9,000 25
Total accounts receivable $200,000  

 

 

The balance of the allowance for uncollectible accounts is $1,100 on December 31, before any adjustments.

 

(a) What amount of bad debts expense will Collins report in its income statement for the year?
$Answer?


(b) Use the financial statement effects template to record Collin's bad debts expense for the year.

Use negative signs with your answers, when appropriate.

 
Balance Sheet
Transaction Cash Asset +

Noncash

Assets

= Liabilities +

Contributed

Capital

+

Earned

Capital

 
Record bad debts expense Answer
 
  Answer
 
  Answer
 
  Answer
 
  Answer
 
 
 
Income Statement

Revenue

-

Expenses

=

Net Income
Answer
 
  Answer
 
  Answer
 


(c) What is the balance of accounts receivable on it December 31 balance sheet?
$Answer?

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Expert Answer

Step 1

In case of a credit sale, the customer is given an option to make payment for the sale within a specified time period and not immediately. It is a competitive market practice and increases the sale value. Such customers are assets to the company and known as Accounts Receivable. A loss in accounts receivable i.e. Bad debt is incurred when the customer does not pay the full amount due by him. It is not possible to ascertain such losses in advance, an estimate of doubtful debt based on the aging schedule is prepared and loss is recognized at the earliest.

Step 2

Computation of Unc...

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Computation of Uncollectible Loss Loss Receivables 110000 Age group Amount 1% 1100 0-30 2% 31-60 40000 800 61-120 121-180 Over 180 27000 5% 1350 14000 10% 1400 9000 25% days Total 2250 200000 6900

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