EX 8-11 Estimating doubtful accounts
Traditional Bikes Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2014, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:
|
Balance |
Percent Uncollectible |
|
|
Age Interval |
$ 740,000 |
½% |
|
Not past due |
390,000 |
2 |
|
1–30 days past due |
85,000 |
4 |
|
31–60 days past due |
28,000 |
14 |
|
61–90 days past due |
42,000 |
32 |
|
91–180 days past due |
15,000 |
80 |
|
Over 180 days past due |
$1,300,000 |
Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2014.