Accounts Receivable Aging Method

P6. Flossmoor Company uses the accounts receivable aging method to estimate uncol- lectible accounts. At the beginning of the year, the balance of the Accounts Receiv- able account was a debit of $88,430, and the balance of Allowance for Uncollectible Accounts was a credit of $7,200. During the year, the company had sales on account of $473,000, sales returns and allowances of $4,200, worthless accounts written off of

$7,900, and collections from customers of $450,730. At the end of year (December 31, 2014), a junior accountant for Flossmoor was preparing an aging analysis of accounts receivable. At the top of page 6 of the report, the following totals appeared:

 

 

  Customer Account	    Total	  Not Yet Due	1–30 Days Past Due	31–60 Days Past Due	61–90 Days Past Due	over 90 Days Past Due
Balance Forward	  $89,640	  $49,030	  $24,110	  $9,210	  $3,990	  $3,300

To finish the analysis, the following accounts need to be classified:

 

Account B. Singh	Amount $  930	Due Date Jan. 14 (next year)
L. Wells	620	Dec. 24
A. Rocky	1,955	Sept. 28
T. Cila	2,100	Aug. 16
M. Mix	375	Dec. 14
S. Prince	2,685	Jan. 23 (next year)
J. Wendt	295	Nov. 5
Â	$8,960	Â

From past experience, the company has found that the following rates are realistic for estimating uncollectible accounts:

Percentage Considered

 

Time

 

Uncollectible

 

Not yet due                                                      2

1–30 days past due                                         5

31–60 days past due                                     15

61–90 days past due                                     25

Over 90 days past due                                  50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ReQUIReD

1.    Complete the aging analysis of accounts receivable.

2.    Compute the end-of-year balances (before adjustments) of Accounts Receivable and Allowance for Uncollectible Accounts.

3.    Prepare an analysis computing the estimated uncollectible accounts. (Round to the nearest dollar.)

4.    Calculate Flossmoor’s estimated uncollectible accounts expense for the year. (Round to the nearest whole dollar).

5.    aCCounting ConneCtion ▶ What role do estimates play in applying the aging analysis? What factors might affect these estimates?