Your employer has asked you to assist the controller in valuing account receivable at 12-31-05. Pertinent information is enclosed and you may have to estimate some items or make assumptions to complete the project.

12/31/2004

Cash $50,000
AR $400,000
Allowance for Doubtful accounts $50,000


During 2005 $62,000 accounts were determined to be uncollectible and were written off. Sales during 2005 were historic and the marketing department is ecstatic. The finance department is less enthusiastic. Sales during the year, all on account, were $3,000,000.00.

At 12-31-05 the following balances were present

Accounts receivable Estimated uncollectible
0-30 days $77,000 4%
30-60 days $110,000 6%
60-90 days $214,000 10%
90-120 days $180,000 20%
120-180 days $75,000 40%
180+ days $300,000 75%
Total $956,000
Allowance for Doubtful Accounts unknown





Also during 2005 previously written off accounts amounting to $3,500 were collected.

1) Given the above information record the information given for accounts receivable and the related accounts.

2) What is the ending AR Balance at 12-31-05?

3) What is the balance of AFDA at 12-31-05?

4) What is the bad debt expense for 2005?

5) What is AR turnover ratio?

6) What is your candid comments for the sales department?



I will appreciate all the help I can get on this problem.

Thanks

Someone please help me on how to solve this problem.
Thanks

I know that this question requires a lot of calculations, but that is the part that I am stuck on. I don't know where to begin in order to solve the question. The only stuff that I have gotten so far is the following

Accounts receivable Estimated uncollectible
0-30 days | $77,000 | 4% | $3,080
30-60 days | $110,000 | 6% | $6,600
60-90 days | $214,000 | 10% | $21,400
90-120 days | $180,000 | 20% | $36,000
120-180 days | $75,000 | 40% | $30,000
180+ days | $300,000 | 75% | $225,000
Total | $956,000 | $322,080




I believe the total write off is $322,080.

Uncollectible Accounts Expense $50,000 (Dr.)
Allowance for Doubtful Accounts $50,000 (Cr.)


Allowance for Doubtful Accounts $62,000 (Dr.)
Accounts Receivable $62,000 (Cr.)


Accounts Receivable $3,500 (Dr.)
Allowance for Doubtful Accounts $3,500 (Cr.)


Beginning Balance $50,000 (Cr.)
Write-off $62,000 (Dr.)
Reinstate $3,500 (Cr.)
End Balance $8,500 (Dr.)


This is the stuff that I got so far. I would appreciate it if someone could show me on how to solve the rest of the questions and let me know if I am on the right track so far.

Thanks