Calculating Allowance for Doubtful Accounts

The video tutorial by Mrs. Martin explains how to calculate the number of days past due for customer accounts, using a step-by-step approach. It covers creating a calendar card, calculating days past due, and implementing these calculations in a spreadsheet. The tutorial also discusses aging of receivables, estimating allowance for doubtful accounts, and making final adjustments based on debit or credit balances. The process involves using percentages to determine uncollectible accounts and adjusting entries accordingly.

What is the first step in calculating the number of days past due?

• Estimate the allowance for doubtful accounts.

• Create a card with all the days of the dates.

• Determine the interest rate.

• Calculate the balance due.

How many days are in May according to the example?

• 28

• 31

• 29

• 30

What is the remaining number of days in May after May 22nd?

• 8

• 9

• 10

• 11

How many days are in November according to the example?

• 30

• 31

• 28

• 29

What is the total number of days past due for Green River Sports?

• 23

• 54

• 60

• 31

What is the purpose of aging of receivables?

• To find the net profit.

• To determine the total sales.

• To estimate the allowance for doubtful accounts.

• To calculate interest rates.

What percentage is used for accounts over 120 days past due?

• 30%

• 80%

• 10%

• 50%

How do you calculate the total for a column?

• Divide the numbers by the subtotal.

• Subtract the numbers from the subtotal.

• Multiply the numbers by the subtotal.

• Add the numbers to the subtotal.

What is the next step after calculating the totals?

• Find the gross sales.

• Determine the net profit.

• Estimate the allowance for doubtful accounts.

• Calculate the interest rate.

What should you do if the allowance for doubtful accounts has a debit balance?

• Ignore the balance.

• Subtract the balance from the uncollectible accounts.

• Multiply the balance by the uncollectible accounts.

• Add the balance to the uncollectible accounts.