Calistoga's adjusted allowance for uncollectible accounts at December 31, 2013, is:

Question

Quizplus · Accepted Answer

To find the adjusted allowance for uncollectible accounts, we need to use the aging method. 
1. We need to calculate the total accounts receivable: 
   $95,500+$53,500+$21,300+$4,700 = $175,000
2. We then calculate the estimated percentage of uncollectible accounts for each aging category: 
   1-30 days: 1%
   31-60 days: 5%
   61-90 days: 20%
   over 90 days: 40%
3. We then multiply the total accounts receivable in each category by the estimated percentage of uncollectible accounts: 
   1-30 days: $95,500 x 1% = $955
   31-60 days: $53,500 x 5% = $2,675
   61-90 days: $21,300 x 20% = $4,260
   over 90 days: $4,700 x 40% = $1,880
4. We add up the estimated uncollectible accounts to get our total estimated allowance: 
   $955 + $2,675 + $4,260 + $1,880 = $9,770
5. Finally, we compare this estimated allowance to the existing allowance of $8,265 and make an adjustment. 
   $9,770 - $8,265 = $1,505, so the adjusted allowance is $1,505. Therefore, the best choice is B.

Calistoga's Adjusted Allowance for Uncollectible Accounts at December 31, 2013