Journalize the transactions under the allowance method, assuming that the allowance account had a beginning balance of $18,330 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable: Aging Class (Number of Days Past Due) Receivables Balance on December 31 Estimated Percent of Uncollectible Accounts 0-30 days $293,000 1 % 31-60 days 110,000 8 61-90 days 35,000 20 91-120 days 13,000 55 More than 120 days 18,000 80 Total receivables $469,000
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Journalize the transactions under the allowance method, assuming that the allowance account had a beginning balance of $18,330 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its
| Aging Class (Number of Days Past Due) |
Receivables Balance on December 31 |
Estimated Percent of Uncollectible Accounts |
||||||||||||
| 0-30 days | $293,000 | 1 | % | |||||||||||
| 31-60 days | 110,000 | 8 | ||||||||||||
| 61-90 days | 35,000 | 20 | ||||||||||||
| 91-120 days | 13,000 | 55 | ||||||||||||
| More than 120 days | 18,000 | 80 | ||||||||||||
| Total receivables | $469,000 |
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