Brown Cow Dairy uses the aging approach to estimate Bad Debt Expense. The balanc

Question

Brown Cow Dairy uses the aging approach to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) 1–30 days old, $12,300; (2) 31–90 days old, $5,300; and (3) more than 90 days old, $3,300. 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 $830 (credit) before the end-of-period adjusting entry is made.

1) What amount of Bad Debt Expense should be recorded on December 31?

2) If the unadjusted balance in the Allowance for Doubtful Accounts was a $630 debit balance, what amount of Bad Debt Expense should be recorded on December 31?

Brown Cow Dairy uses the aging approach to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) 1–30 days old, $12,300; (2) 31–90 days old, $5,300; and (3) more than 90 days old, $3,300. 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 $830 (credit) before the end-of-period adjusting entry is made.

Explanation / Answer

Calculate Bad debt expense :

1) Bad debt expense = 1805-830 = 975

2) Bad debt expense = 1805+630 = 2435

1–30 days old 12300 5% 615 31–90 days old 5300 10% 530 more than 90 days old 3300 20% 660 Total 1805

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.