On December 31,2015,Jerome Company has an accounts receivable balance of $300,000 before any year-end adjustments.The Allowance for Doubtful Accounts has a $1,000 credit balance.The company prepares the following aging schedule for accounts receivable: What is the Allowance for Uncollectible Accounts at December 31,2015?

Question

On December 31,2015,Jerome Company has an accounts receivable balance of $300,000 before any year-end adjustments.The Allowance for Doubtful Accounts has a $1,000 credit balance.The company prepares the following aging schedule for accounts receivable:  What is the Allowance for Uncollectible Accounts at December 31,2015?

Quizplus · Accepted Answer

To calculate the Allowance for Uncollectible Accounts, we need to apply the percentages from the aging schedule to the corresponding account balances, and then add up the resulting amounts.

Age Category: 0-30 days 
Amount: $100,000 
Percentage: 1% 
Calculation: $100,000 x 1% = $1,000

Age Category: 31-60 days 
Amount: $80,000 
Percentage: 3% 
Calculation: $80,000 x 3% = $2,400

Age Category: 61-90 days 
Amount: $50,000 
Percentage: 6% 
Calculation: $50,000 x 6% = $3,000

Age Category: Over 90 days 
Amount: $70,000 
Percentage: 20% 
Calculation: $70,000 x 20% = $14,000

Total Calculated Allowance: $20,400

Since the current balance in the Allowance for Doubtful Accounts is a credit of $1,000, we need to subtract this amount from the calculated allowance to arrive at the final answer:

$20,400 - $1,000 = $19,400

Therefore, the Allowance for Uncollectible Accounts at December 31, 2015 is $9,600 (Choice C).

On December 31,2015,Jerome Company Has an Accounts Receivable Balance of $300,000