Reference no: EM13914631
Flossmoor Company uses the accounts receivable aging method to estimate uncol- lectible accounts. At the beginning of the year, the balance of the Accounts Receiv- able account was a debit of $88,430, and the balance of Allowance for Uncollectible Accounts was a credit of $7,200. During the year, the company had sales on account of $473,000, sales returns and allowances of $4,200, worthless accounts written off of $7,900, and collections from customers of $450,730. At the end of year (December 31, 2014), a junior accountant for Flossmoor was preparing an aging analysis of accounts receivable. At the top of page 6 of the report, the following totals appeared:
|
Customer Account
|
Total
|
Not Yet Due
|
1-30 Days Past Due
|
31-60 Days Past Due
|
61-90 Days Past Due
|
over 90 Days Past Due
|
|
Balance Forward
|
$89,640
|
$49,030
|
$24,110
|
$9,210
|
$3,990
|
$3,300
|
To finish the analysis, the following accounts need to be classified:
| Account |
Amount |
Due Date |
|
B. Singh
|
$ 930
|
Jan. 14 (next year)
|
|
L. Wells
|
620
|
Dec. 24
|
|
A. Rocky
|
1,955
|
Sept. 28
|
|
T. Cila
|
2,100
|
Aug. 16
|
|
M. Mix
|
375
|
Dec. 14
|
|
S. Prince
|
2,685
|
Jan. 23 (next year)
|
|
J. Wendt
|
295
|
Nov. 5
|
|
|
$8,960
|
|
From past experience, the company has found that the following rates are realistic for estimating uncollectible accounts:
Percentage Considered
Time
Uncollectible
Not yet due 2
1-30 days past due 5
31-60 days past due 15
61-90 days past due 25
Over 90 days past due 50
Required:
1. Complete the aging analysis of accounts receivable.
2. Compute the end-of-year balances (before adjustments) of Accounts Receivable and Allowance for Uncollectible Accounts.
3. Prepare an analysis computing the estimated uncollectible accounts. (Round to the nearest dollar.)
4. Calculate Flossmoor's estimated uncollectible accounts expense for the year. (Round to the nearest whole dollar).
5. What role do estimates play in applying the aging analysis? What factors might affect these estimates?
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