SEALIFE Company uses the percentage of receivable method in estimating uncollectible accounts receivable. The aging analysis of accounts receivable at 31 December 2019 follows: Age Group Total Percentage uncollectible Not yet due $52,000 1% 1-30 days past due $30,000 2% 31-60 days past due $13,000 ?% If SEALIFE's Allowance for Doubtful Accounts at 31 December 2019 was $2,160, the percentage estimated uncollectible for receivables that are past due for 31 - 61 days is: A: 4% B: 5% C: 6% D: 8%
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
SEALIFE Company uses the percentage of receivable method in estimating uncollectible accounts receivable. The aging analysis of accounts receivable at 31 December 2019 follows:
|
|
Age Group Total |
Percentage uncollectible |
|
Not yet due |
$52,000 |
1% |
|
1-30 days past due |
$30,000 |
2% |
|
31-60 days past due |
$13,000 |
?% |
If SEALIFE's Allowance for Doubtful Accounts at 31 December 2019 was $2,160, the percentage estimated uncollectible for receivables that are past due for 31 - 61 days is:
A: 4%
B: 5%
C: 6%
D: 8%
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