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Sam's Construction had a balance in its allowance for doubtful accounts at the end of 2014...

Sam's Construction had a balance in its allowance for doubtful accounts at the end of 2014 of $44,500. Sam reported credit sales of $5,000,000 in 2014 and wrote off receivables of $43,000 during 2014. At the end of the year, Sam estimates un-collectible accounts receivable based on the year-end aging using the assumptions provided at left.

What should the balance be in Sam's Construction allowance for doubtful accounts as of December 31,2015?

As of December 31, 2015 Estimated
Days Past Due Receivables Uncollectible
0-30 days past due 300,000 2.50%
31-60 days past due 125,000 9.00%
61-90 days past due 55,000 23.00%
90+ days past due 15,000 65.00%
495,000
Allowance for doubtful accounts at 12/31/14 44,500
Write-offs in 2015 43,000
2015 Sales 5,000,000

Solutions

Expert Solution

Accounts receivable Percent uncollectible Estimated Uncollectible
0-30 Days past due $                       300,000 x 2.50% = $                                   7,500
31 to 60 Days past due $                       125,000 x 9.00% = $                                 11,250
61 to 90 Days past due $                         55,000 x 23.00% = $                                 12,650
90+ Days past due $                         15,000 x 65.00% = $                                   9,750
Estimated balance of allowance for uncollectibles $                                 41,150

Answer is $41,150

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ekkarill92 answered 2 days ago
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