Thunderwood Industries has a past history of uncollectible accounts, as shown below. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule you completed in Exercise 9-8.
Age Class
Percent
Uncollectible
Not past due 2%
1–30 days past due 6
31–60 days past due 12
61–90 days past due 30
Over 90 days past due 75
Answer:
Balance
Not Past
Due
Days Past Due
1–30 31–60 61–90
Over
90
Total receivables 833,500 488,000 166,500 96,000 43,000 40,000
Percentage uncollectible 2% 6% 12% 30% 75%
Allowance for doubtful
accounts 74,170 9,760 9,990 11,520 12,900 30,000