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The Corporate Finance Institute Accounting
Aging of Accounts Method:
• This method focuses on the value of the net accounts receivable.
• This method focuses more on the value of AR, therefore, being a
balance sheet approach.
• This method assumes that the more days that go by, the higher the
percentage of uncollectibility
Example:
Days Accounts Estimate Estimated amount
Outstanding Receivable Balance % uncollectible uncollectible
0 – 30 $210,100 0.2% $420
31 – 60 84,500 0.6% 507
61 – 90 26,900 2.0% 538
>90 7,460 10.0% 746
Total $2,211
Therefore, from this example, the following entry should be made:
DR Bad Debt Expense: 2,211
CR Allowance for Doubtful Accounts (ADA): 2,211
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