Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $51,300 of which 3 percent is estimated to be uncollectible (2) up to 180 days past due, $14,900 of which 11 percent is estimated to be uncollectible, and (3) more than 180 days past due, $5,400 of which 31 percent is estimated to be uncollectible. At December 31, end of the current year, the Allowance for Doubtful Accounts balance is $300 (credit) before the end-of-period adjusting entry is made. Record the adjusting journal entry for bad debt expenses & Show how the various accounts(Accounts receivable, allowance for doubful debts) related to accounts receivable should be shown on December 31 Current year balance Sheet.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Casilda Company uses the aging approach to estimate
(1) not yet due, $51,300 of which 3 percent is estimated to be uncollectible
(2) up to 180 days past due, $14,900 of which 11 percent is estimated to be uncollectible, and
(3) more than 180 days past due, $5,400 of which 31 percent is estimated to be uncollectible.
At December 31, end of the current year, the Allowance for Doubtful Accounts balance is $300 (credit) before the end-of-period
Record the adjusting
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