Textbook Problem

Estimating doubtful accounts

Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

Age Class	Balance	Percent Uncollectible
Not past due	$ 892,000	3/4%
1-30 days past due	285,000	1
31-60 days past due	101,000	8
61-90 days past due	63,000	16
91-180 days past due	43,100	50
Over 180 days past due	17,700	80
	$1,401,800

Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.