On December 31, 2005, Vale Company had an unadjusted credit balance of $1,000 in its allowance for uncollectible accounts. An analysis of Vale's trade accounts receivable at that date revealed the following:
Age Amount Estimated Uncollectible
0-30 days $60,000 5%
31-60 days $4,000 12%
Over 60 days $2,000 70%
What amount should Vale report as allowance for uncollectible accounts in its December 31, 2005 balance sheet?
The amount that should be reported as Allowance for Uncollectible Accounts is:
5% * ...
This solution looks at the allowance for uncollectible accounts based on accounts receivable data.