Reference no: EM132870577
Question - Estimating Bad Debts Expense and Reporting of Receivables - At December 31, 2013, Sunil Company had a balance of $600,000 in its accounts receivable and an unused balance of $6,720 in its allowance for uncollectible accounts. The company then aged its accounts as follows:
Current $486,400
0-60 days past due 70,400
61-180 days past due28,800
Over 180 days past due 14,400
Total accounts receivable $600,000
The company has experienced losses as follows: 1% of current balances, 5% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 40% of balances over 180 days past due. The company continues to base its provision for credit losses on this aging analysis and percentages.
Required -
a. What amount of bad debts expense does Sunil report on its 2013 income statement?
b. Show how accounts receivable and the allowance for uncollectible accounts are reported in its December 31, 2013, balance sheet.