Reporting Uncollectible Accounts and Accounts Receivable
LaFond Company analyzes its accounts receivable at December 31, 2016, and arrives at the aged categories below along with the percentages that are estimated as uncollectible.
Age Group Accounts Receivable Estimated Loss %
Current (not past due) $250,000 0.5%
1-30 days past due 90,000 1.0
31-60 days past due 20,000 2.0
61-120 days past due 11,000 5.0
121-180 days past due 6,000 10.0
Over 180 days past due 4,000 25.0
Total accounts receivable 381,000
At the beginning of the fourth quarter of 2016, there was a credit balance of $4,350 in the Allowance for Uncollectible Accounts. During the fourth quarter, LaFond Company wrote off $3,830 in receivables as uncollectible.
A. What amount of bad debts expense will LaFond report for 2016?
B. What is the balance of accounts receivable that it reports on its December 31, 2016, balance sheet? $376,300
C. Set up T-accounts for both Bad Debt Expense and for Allowance for Uncollectible Accounts. Enter any beginning balances and effects from the information above (including your results from parts a and b).
Bad Debts Expense Allowance for Doubtful Accounts
A) 4,700 0 Bag 0 4,350
Bal.
Balance 4,700 0 Write-off 3,850