Expense. The balance of each account receivable is aged on the basis of three ti

Question

Expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) 1-30 days old, $12,000; (2) 31-90 days old. $5,000; and (3) more than 90 days old. $3,000. Experience has shown that for each age group, the average loss rate on the amount of the receivable due to uncollectibility is (1) 5 percent. (2) 10 percent, and (3) 20 percent, respectively. At December 31 (end of the current year), the Allowance for Doubtful Accounts balance was $800 (credit) before the end-of-period adjusting entry is made. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. What amount of Bad Debt Expense should be recorded on December 31? If the unadjusted balance in the Allowance for Doubtful Accounts was a $600 debit balance, what amount of Bad Debt Expense should be recorded on December 31?

Explanation / Answer

Jan-30 31-90 More than 90 Total 1 Account Receivables 12000 5000 3000 20000 Estimated Uncollectable 5% 10% 20% Estimated Uncollectable 600 500 600 1700 2 Amount Of Bad debt Expense 1700-800 900 3 Amount Of Bad debt Expense 1700+600 2300

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