On Dec 31, 2016, Rawda Company had accounts receivable of$750,000 and allowance for doubtful accounts that had a debitbalance of $10,000. The company uses an aging schedule (agingmethod) to estimate its uncollectible accounts as shown in thefollowing table:
# of Days Outstanding | Amounts | Estimated % Uncollectible |
0-30 | $ 200,000 | 2% |
31-60 | 200,000 | 4% |
61-90 | 200,000 | 6% |
Over 90 | 150,000 | 8% |
Requirements:
- What is the required balance for the allowance of doubtfulaccounts on Dec 31, 2016?
- What is the net realizable value of the accounts receivable onDec 31, 2016?
- If on May 1, 2017, one of the company’s customer that owed thecompany $21,000 filed bankruptcy, what is the balance of theallowance for doubtful accounts on May 1, 2017?
- If On July 31, 2017, the customer that filed a bankruptcy onMay 1, 2017 came back and paid Radwda $15,000, what is the balanceof the allowance for doubtful accounts on July 31, 2017?
