In: Accounting
Revise your worksheet to reflect these updated assumptions then
answer the questions that follow.
You have been provided with the following Aging Report to use to
adjust the Allowance for Uncollectible Accounts for a company at
year end.
Age Group | Accounts Receivable |
Estimated Percent Uncollectible |
||||||
Not yet due | $ | 90,000 | 5 | % | ||||
1-30 days past due | 40,000 | 10 | % | |||||
31-60 days past due | 28,000 | 20 | % | |||||
61-90 days past due | 22,000 | 40 | % | |||||
Over 90 days past due | 18,000 | 80 | % | |||||
$ | 198,000 | |||||||
Allowance for Uncollectible Accounts | 2,100 | Credit |
After reviewing the data, you note the 'not yet due' category is
overstated by 20%, while the 'Over 90 days' category is understated
by 20%, (this error also caused the AR balance on the schedule to
not equal the amount of Accounts Receivable on the balance
sheet).
Also, you note the balance in the Allowance account is actually a
debit, rather than a credit. Being that the normal balance for this
account is a credit, the accountant hadn't noticed the issue.
Required:
1. Use your spreadsheet to recalculate the needed
adjustment and account balances. What will be the balance in
Accounts Receivable and the Allowance for Uncollectible Accounts
based on the above information?