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Davis Company had a $700 credit balance in Allowance for Doubtful Accounts at De

ID: 2409886 • Letter: D

Question

Davis Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2015, before the current year’s provision for uncollectible accounts. An aging of the accounts receivable reveled the following:

                                                                                                            Estimated % Uncollectible     

Current Accounts                                            $120,000                                 1%

1-30 days past due                                             20,000                                  3%      

31-60 days past due                                           10,000................................ 6%

61-90 days past due 10,000...................................12%

Over 90 days past due 8,000.....................................30%

Total Accounts Receivable 168,000

Determine the amount to recognize as bad debt expense on December 31, 2015.

Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year’s provision for uncollectible accounts. What is the amount of bad debt expense to recognize for the year.

What is the amount that is reported as the net balance for Accounts Receivable as of December 31, 2015?

Explanation / Answer

Debit Credit A Bad Debt Expense 5,300 Allowance for Doubtful Accounts 5,300 ($6,000 – $700) B Bad Debt Expense 6,500 Allowance for Doubtful Accounts 6,500 ($6,000 + $500) C 168,000 - 6500 = 161,500

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