Question
Alpha Company uses aging of Accounts Receivable to estimate uncollectibles. The unadjusted Trial Balance amount of Accounts Receivable on 12/31/16 has a balance that consists
Alpha Company uses aging of Accounts Receivable to estimate uncollectibles. The unadjusted Trial Balance amount of Accounts Receivable on 12/31/16 has a balance that consists of:
Days Outstanding | Amount | Estimated uncollectible |
0-60 | 200,000 | 1% |
61-120 | 90,000 | 2% |
Over 120 | 100,000 | 6% |
Total | 390,000 |
|
Activity during FY 16, for Alpha Company consisted of:
July 15 | Alpha wrote off the Bravo Zuly Company account as not collectible for the amount 8,000 |
Oct 20 | Alpha Company recovered 5,000 from the Charlie Delta Company for settlement of their prior debt that had been written off during FY 2015 |
Alpha Companys 12/31/15 allowance for uncollectible accounts was 2,500. Under the aging method, what amounts should Alpha Company report at 12/31/16 for:
1. Allowance for Uncollectible Accounts
2. Bad Debt
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