| Course | AC116 Accounting II |
|---|---|
| Unit | Unit 3 |
| Paper type | Allowance estimation exercise |
| Length | About 670 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC116 Unit 3
Five Bands and a Frost: A Unit 3 Allowance Estimation Exercise That Ages an Orchard Supplier's Receivables
[Student Name]
Purdue University Global
AC116: Accounting II
Unit 3 Allowance Estimation Exercise
[Instructor Name]
[Date]
Ridgeline Orchard Supply, Inc., its customers, balances and loss rates are composite; the textbook, credit loss standard and framework cited are real.
Aging Grid, December 31
Each customer group's balance is spread across five columns: current, 1 to 30 days past due, 31 to 60, 61 to 90, and over 90.
1. Apple growers, 14 accounts: current $15,800; 1 to 30, $6,200; 31 to 60, $2,900; 61 to 90, $1,300; over 90, $0. Total $26,200.
2. Cherry and stone fruit growers, 9 accounts: current $8,100; 1 to 30, $3,900; 31 to 60, $3,100; 61 to 90, $2,000; over 90, $2,400. Total $19,500.
3. Vineyards, 6 accounts: current $5,300; 1 to 30, $1,700; 31 to 60, $900; 61 to 90, $500; over 90, $0. Total $8,400.
4. Landscapers and garden centers, 5 accounts: current $2,000; 1 to 30, $800; 31 to 60, $500; 61 to 90, $300; over 90, $700. Total $4,300.
Column totals: current $31,200; 1 to 30, $12,600; 31 to 60, $7,400; 61 to 90, $4,100; over 90, $3,100. Cross-foot: $31,200 plus $12,600 plus $7,400 plus $4,100 plus $3,100 equals $58,400, which agrees with the Accounts Receivable ledger balance.
Loss Rates and Estimated Uncollectible Amounts
1. Current: $31,200 at 1 percent, $312. Most growers pay within terms after the fall harvest, and Ridgeline's write-offs on current accounts have been rare.
2. 1 to 30 days: $12,600 at 3 percent, $378. Short delays are common in December, when growers wait for packing house settlements.
3. 31 to 60 days: $7,400 at 8 percent, $592. Accounts this late usually mean a settlement has been delayed or disputed.
4. 61 to 90 days: $4,100 at 20 percent, $820. Past experience shows about one dollar in five in this band is never collected.
5. Over 90 days: $3,100 at 45 percent, $1,395. Two cherry growers in this band lost much of their crop to a spring frost, and one has not responded to the credit manager since October.
Required allowance: $312 plus $378, $592, $820 and $1,395 equals $3,497.
Adjusting Entry
The allowance has a credit balance of $1,150 before adjustment, after the year's write-offs.
Required balance $3,497, less existing balance $1,150, equals $2,347.
Dec. 31. Bad Debt Expense, debit $2,347; Allowance for Doubtful Accounts, credit $2,347. Adjusts the allowance to the balance indicated by the aging.
The adjustment is the difference between what the allowance should hold and what it already holds; booking the full $3,497 as expense would double count the losses already provided for earlier in the year.
After Adjustment
Accounts Receivable $58,400; Allowance $3,497; net realizable value $54,903. Bad debt expense for the year includes the $2,347 recorded here plus any earlier adjustments.
Why the Rates Rise
The longer an account goes unpaid, the less likely it is to be collected, which is why the aging method assigns higher rates to older bands (Franklin et al., 2019). The rates here also reflect the customers. Fruit growers are paid once or twice a year, so lateness tracks the harvest and the weather. Under the current credit loss standard, Ridgeline must look past its own history to present conditions and supportable forecasts (Financial Accounting Standards Board, 2016). The spring frost is exactly that kind of current condition, and it is why the over-90 rate is set at 45 percent rather than the 30 percent Ridgeline used last year.
A Check on the Estimate
The required allowance is 6.0 percent of receivables, up from about 5 percent a year earlier. The increase is concentrated in the cherry growers, whose oldest balances make up most of the over-90 band. An estimate that can be explained in this way, band by band and customer group by group, tells a reader far more than one percentage applied to sales would, because it shows where the risk sits (Financial Accounting Standards Board, 2018).
References
Financial Accounting Standards Board. (2016). Financial instruments, credit losses (Topic 326): Measurement of credit losses on financial instruments (Accounting Standards Update No. 2016-13). https://www.fasb.org
Financial Accounting Standards Board. (2018). Conceptual framework for financial reporting: Chapter 1, The objective of general purpose financial reporting, and Chapter 3, Qualitative characteristics of useful financial information (Statement of Financial Accounting Concepts No. 8, as amended). https://www.fasb.org
Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 1: Financial accounting. OpenStax. https://openstax.org/details/books/principles-financial-accounting
What the AC116 Unit 3 assignment asks for
The third AC116 unit gives a customer list or aging data and asks for an estimate of uncollectible accounts. Build an aging grid with one row per customer or group and columns for each past-due band, then total the columns and confirm that they cross-foot to the receivable balance. Apply a loss rate to each band and compute the estimated uncollectible amount. Defend each rate with a sentence drawn from the problem's facts. Sum the bands to get the required allowance, then compare it with the allowance's current balance and record only the difference as the adjustment. Watch whether the existing balance is a credit or a debit. A short check on reasonableness adds value. Most exercises fill two pages. Cite the textbook and standards in APA 7.
Inside the AC116 Unit 3 example
The sample's grid lists apple growers, cherry and stone fruit growers, vineyards and landscapers, each with balances across five bands, and the column totals cross-foot to $58,400. A numbered list then applies rates of 1, 3, 8, 20 and 45 percent, each with a reason tied to harvest timing, packing house settlements, past experience or the frost. The bands sum to $3,497. The adjusting entry books $2,347, and the highlighted sentence explains why booking the full $3,497 would double count. The balances after adjustment give net realizable value of $54,903. A section explains why rates rise with age and cites the credit loss standard on current conditions. A final check notes the allowance rose to 6 percent of receivables.
Where the points sit in the AC116 Unit 3 rubric
Allowance estimation exercises are graded on a correct grid, correct arithmetic and a correct adjusting entry. Cross-footing to the ledger is often the first thing a grader checks. Each band's rate should be applied correctly, and defended where the prompt asks. The adjustment must equal the required balance less the existing balance, with the sign of the existing balance handled properly. Recording the full estimate as expense is a frequent and costly error. A reasonableness check shows judgment. Clear layout and consistent customer groups help the grader. The remaining AC116 points go to correctly formatted APA 7 sources.
AC116 Unit 3 help: mistakes that cost points
The most frequent aging error is recording the whole estimate as bad debt expense instead of the adjustment needed. Others subtract a debit balance in the allowance when they should add it. Columns are not cross-footed, so a misplaced balance goes unnoticed. Rates are applied without any reason, or the same rate is used for every band. Customer balances are placed in the wrong band because the due date was confused with the invoice date. If your customer list is long and the bands are not tying to the ledger, a writer can build the aging and the entry from your data.
Get an AC116 Unit 3 example written to your instructions
Send the customer list and aging data from Unit 3's problem along with the rubric and whatever instructions came with it. Each band's rate is defended against the facts your problem supplies, not a generic loss table, and the reconciliation starts from whatever allowance balance the problem states. The first custom sample, returned within 24-48h, costs nothing. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC116 Unit 3 questions, answered
What if the problem gives the loss percentages already?
Then the defense column changes job. Instead of justifying a chosen rate, it explains why the given rates rise with age and flags any band where the stated figure looks out of line with the facts, such as a large customer known to be in trouble. Many AC116 problems supply rates for most bands and leave one open, which is where the reasoning marks sit.
Why is the expense different from the aging total?
Because the aging schedule produces the balance the allowance should end the period holding, not the expense for the period. Whatever the allowance already holds, from last period's estimate less this period's write offs, has to be accounted for. The expense is the adjustment that moves the existing balance to the target, which is why the reconciliation lines matter.
Is the percentage-of-sales method ever used in this exercise?
Some sections pair the two. Under the percentage-of-sales approach, the rate times credit sales is itself the expense, and the existing allowance balance is ignored when computing it. The aging approach targets the balance sheet figure instead. When a problem asks for both, the finished sample places the two results side by side and states which produces the larger expense and why.
Where can I find a free AC116 Unit 3 sample paper?
This page offers a complete AC116 Unit 3 allowance estimation exercise that ages an orchard supplier's receivables into five bands, defends each loss rate and books a $2,347 adjustment.
Why is the over-90 rate 45 percent in the AC116 Unit 3 sample?
Two cherry growers in that band lost much of their crop to a spring frost, and one stopped responding. Current conditions like that raise the expected loss above the prior year's 30 percent.