Perry Materials Supply Uses the Aging Method to Account for Uncollectible

question 30

Essay

Perry Materials Supply uses the aging method to account for uncollectible accounts.At the end of the year,the balance in Accounts receivable was $146,000 and Perry prepared the following aging schedule. $\begin{array}{|l|r|r|r|r|r|} \hline \text { Customer } & \text { 1-30 Days } & \text { 31-60 Days } & \text { 61-90 Days } & \begin{array}{c}\text { Over } 90 \\\text { Days }\end{array} & \begin{array}{c}\text { Total } \\\text { Balance }\end{array}\\\hline \text { Johnson } & \$ 4,600 & \$ 3,200 & & & \$ 7,800 \\\hline \text { Hot Pots, Inc. } & & & \$ 800 & \$ 1,000 & 1,800 \\\hline \text { Potter } & 40,000 & 550 & & & 40,550 \\\hline \text { Harrison } & & 3,600 & 900 & & 4,500 \\\hline \text { Marx } & & & 2,000 & 50 & 2,050 \\\hline \text { Younger } & 65,000 & & & & 65,000 \\\hline \text { Merry Maids } & 5,900 & & & & 5,900 \\\hline \text { Acher } & 12,000 & 6,400 & & & 18,400 \\\hline \text { Total } & \$ 127,500 & \$ 13,750 & \$ 3,700 & \$ 1,050 & \$ 146,000 \\\hline \text { Uncollectible percentage } & & & & & \\\hline \text { Estimated uncollectible amount } & & & & & \\\hline\end{array}$

Based on past history,Perry uses 2% for current receivables (1-30 days),10% for 31-60 days,20% for 61-90 days,and 40% for over 90 days.Please complete the schedule and calculate the estimated amount of Uncollectible accounts.

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Definitions:

Indirect Material

Materials used in the support of the production process but not directly a part of the finished product.

Period Cost

Costs that are expensed in the period in which they are incurred, not directly tied to the production of goods or services.

Goals Met

A term indicating the achievement of predefined objectives or targets.

Planning

The process of outlining business goals, strategies, and actions to achieve desired outcomes.