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27 November, 07:50

Rigney Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year-end.

Number of Days Outstanding

Total 0-30 31-60 61-90 91-120 Over 120

Accounts receivable 200,000 77,000 46,000 39,000 23,000 $15,000

% uncollectible 1% 4% 5% 8% 20%

Calculate the total estimated bad debts based on the above information.

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  1. 27 November, 07:57
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    Total estimated bad debts = $9,400

    Explanation:

    days outstanding A/c Receivable % estimate

    0-30 $77,000 1 $770

    31-60 $46,000 4 $1,840

    61-90 $39,000 5 $1,950

    91-120 $23,000 8 $1,840

    over 120 $15,000 20 $3,000

    Total 200,000 $9,400
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