To estimate the allowance for doubtful accounts based on the aging of receivables, we will calculate the amount for each age category by multiplying the balance of receivables in each category by the corresponding percentage of uncollectibility. Then we will sum these amounts to determine the total allowance for doubtful accounts.
Here is how the calculations look:
-
Not Past Due:
- Balance: $607,400
- Percentage Uncollectible: 1%
- Allowance: \( 607,400 \times 0.01 = 6,074 \)
-
1-30 Days Past Due:
- Balance: $233,000
- Percentage Uncollectible: 3%
- Allowance: \( 233,000 \times 0.03 = 6,990 \)
-
31-60 Days Past Due:
- Balance: $121,600
- Percentage Uncollectible: 12%
- Allowance: \( 121,600 \times 0.12 = 14,592 \)
-
61-90 Days Past Due:
- Balance: $96,500
- Percentage Uncollectible: 30%
- Allowance: \( 96,500 \times 0.30 = 28,950 \)
-
Over 90 Days Past Due:
- Balance: $66,000
- Percentage Uncollectible: 75%
- Allowance: \( 66,000 \times 0.75 = 49,500 \)
Now, we will sum up all the calculated allowances:
\[ \text{Total Allowance for Doubtful Accounts} = 6,074 + 6,990 + 14,592 + 28,950 + 49,500 \]
Calculating the sum:
- \( 6,074 + 6,990 = 13,064 \)
- \( 13,064 + 14,592 = 27,656 \)
- \( 27,656 + 28,950 = 56,606 \)
- \( 56,606 + 49,500 = 106,106 \)
Total Allowance for Doubtful Accounts
Total Allowance = $106,106
Therefore, the estimated allowance for doubtful accounts for Evers Industries is $106,106.
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