Preparing an aging schedule
Potter Stables uses the aging method to estimate its bad debts. Sherman Potter, the company president, has given you the following aging of accounts receivable as of December 31, 2009, along with the historical probabilities that the account balances will not be collected.
|
Account Age |
Balance |
Non collection Probability |
|
Current |
$290,000 |
2% |
|
1-45 days past due |
110,000 |
5% |
|
46-90 days past due |
68,000 |
8% |
|
Over 90 days past due |
40,000 |
15% |
Compute total receivables and expected bad debts as of December 31, 2012.