Q1) The Draber Company uses allowance method based on aging method to find out estimated allowance for doubtful accounts. Below is given an aging at the end of current period with the percent uncollectible experience rates:
| |
|
Number of Days Outstanding |
| |
Total |
0-30 days |
31-60 days |
61-90 days |
91-120 days |
Over 120 days |
| Accounts Receivable |
$450,000 |
$220,000 |
$100,000 |
$45,000 |
$30,000 |
$55,000 |
| %uncollectible rate |
|
2% |
4% |
6% |
8% |
10% |
Suppose that Draber Company uses 4% of total sales to evaluate allowance for doubtful accounts as opposed to aging of accounts receivable. What would you replies be for parts 1 and 2 if sales for current period were $220,000?