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Aging Receivables and Bad Debt Expense
Perkinson Corporation sells paper products to a large number of retailers. Perkinson’s accountant has prepared the following aging schedule for its accounts receivable at the end of the year.
Before adjusting entries are entered, the balance in the allowance for doubtful accounts is a debit of $480.
Required:
1. Calculate the desired postadjustment balance in Perkinson’s allowance for doubtful accounts.
2. Determine bad debt expense for the year.
(a)
Aging method:
This is a method in which the receivables are sorted according to their collectable estimation. This is done on the basis of their outstanding invoices period. Basically, aging means to check the how old an outstanding balance of receivable is present in the books.
To calculate:
The post adjustment balance in allowance for doubtful accounts.
The Perkinson Corporation accounts receivables is as follows:
| Accounts Receivables | Amount |
Proportion expected |
| Within discount period | ||
This is given in the question
(b)
Aging method:
This is a method in which the receivables are sorted according to their collectable estimation. This is done on the basis of their outstanding invoices period. Basically, aging means to check the how old an outstanding balance of receivable is present in the books.
The computation of bad debt expense.
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