I have an Aged Trial Balance and my problem is stated as such…
“From the 2011 Aged Trial Balance calculate the allowance for bad debts using your auditor’s judgement. Compare the calculated amount with the allowance recorded and report the amount of overstatement/understatement.
I don’t know where to start. I also have an A/R Lead Schedule for year end 12/31/11, if this is needed (see below). I don’t want an answer just the steps to calculate what is being asked. I was not given any other information.
Please help!
| Accounts Receivable Lead Schedule | Prepared by | ||||
| For Year Ended 12/31/2011 | Reviewed by | ||||
| PBC | |||||
| (Audited) | Credits/ | Unaudited | |||
| Balance | Receipts/ | Balance | |||
| Acct # | Account Title | 12/31/2010 | Additions | Writeoffs | 12/31/2011 |
| 11000 | Accounts Receivable | $16,410,902.71 | $231,613,231.99 | $198,243,874.72 | $49,780,259.98 |
| 11100 | Advances to Employees | $0.00 | $0.00 | $0.00 | $0.00 |
| 11400 | Other Receivables | $0.00 | $1,000,000.00 | $0.00 | $1,000,000.00 |
| 11500 | Allowance for Doubtful Accounts | ($1,262,819.88) | $0.00 | $8,810.13 | ($1,254,009.75) |
| $15,148,082.83 | $232,613,231.99 | $198,235,064.59 | $49,526,250.23 | ||