Financial Accounting
3rd Edition
ISBN: 9780078025549
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 5, Problem 5.9BE
To determine
Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. Estimated future uncollectible accounts receivable are known as bad debt expense.
Aging of receivables method:
A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.
To compute: The total estimated uncollectible accounts.
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Zuo Software categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts.1. Accounts not yet due = $400,000; estimated uncollectible = 8%.2. Accounts 1–30 days past due = $50,000; estimated uncollectible = 15%.3. Accounts 31–90 days past due = $40,000; estimated uncollectible = 30%4. Accounts more than 90 days past due = $30,000; estimated uncollectible = 50%.At 12/31/2021, before recording any adjustments, Zuo has a credit balance of $22,000 in its allowance for uncollectible accounts.
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Chapter 5 Solutions
Financial Accounting
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