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OneHeart Company provided the following information pertaining to accounts receivable on December 31, 2020 (see picture below): During the current year, the entity wrote-off P70,000 in accounts receivable and recovered P40,000 that had been written off in prior years
OneHeart Company provided the following information pertaining to accounts receivable on December 31, 2020 (see picture below):
During the current year, the entity wrote-off P70,000 in accounts receivable and recovered P40,000 that had been written off in prior years. On January 1, 2020, the allowance for uncollectible accounts was P100,000.
Under the aging method, what amount of allowance for uncollectible accounts should be reported on December 31, 2020?
Days Outstanding Estimated Amount Estimated Uncollectible
0-60 1,200,000 1%
61-120 900,000 2%
Over 120 1,000,000 60,000
= 3,100,000
A. 190,000
B. 100,000
C. 130,000
D. 90,000
Expert Solution
| Days Estimated | Estimated Amount | % of Uncollectable | Amount |
| 0-60 | 1200000 | 1% | 12000 |
| 61-120 | 900000 | 2% | 18000 |
| Over 120 | 1000000 | 6% | 60000 |
| Total | 3100000 | 90000 |
So, Under the aging method, allowance for uncollectible accounts that should be reported on December 31, 2020 is 90,000.
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