The Physical Therapy Center specializes in helping patients regain motor skills after serious accidents. The center has the following balances on December 31, 2012, before any adjustment: Accounts Receivable = $100,000; Allowance for Uncollectible Accounts = $3,000 ( debit ). The center estimates uncollectible accounts based on an aging of accounts receivable as shown below.
Age Group.....................Amount Receivable......... Estimated Percent Uncollectible
Not yet due ...................................$ 50,000............................................. 5%
0 - 60 days past due...........................25,000............................................. 10%
61-120 days past due .........................15,000............................................. 20%
More than 120 days past due .................10,000 .............................................70%
Total ..........................................$100,000
Required:
1. Estimate the amount of uncollectible receivables.
2. Record the adjustment for uncollectible accounts on December 31, 2012.
3. Calculate the net realizable value of accounts receivable.