Concept explainers
Computing
Lin’s Dairy uses the aging approach to estimate bad debt expense. The ending balance of each
Required:
What amount should be recorded as Bad Debt Expense for the current year?
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GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
- Aging Method Bad Debt Expense Carol Simon, the manager of Handy Plumbing has provided the following aging schedule for Handys accounts receivable: Carol indicates that the $125,200 of accounts receivable identified in the table does not include $9,400 of receivables that should be written off. Required: 1. Journalize the $9,400 write-off. 2. Determine the desired post adjustment balance in allowance for doubtful accounts. 3. If the balance in allowance for doubtful accounts before the $9,400 write-off was a debit of $550, compute bad debt expense. Prepare the adjusting entry to record bad debt expense.arrow_forwardAging Method Bad Debt Expense Cindy Bagnal, the manager of Cayce Printing Service, has provided the following aging schedule for Cayces accounts receivable Cindy indicates that the $121,100 of accounts receivable identified in the table does not include $4,600 of receivables that should be written off. Required: 1. Journalize the $4,600 write-off. 2. Determine the desired post adjustment balance in allowance for doubtful accounts (round each aging category to the nearest dollar). 3. If the balance in allowance for doubtful accounts before the $4,600 write-off was a debit of $700, compute bad debt expense. Prepare the adjusting entry to record bad debt expense.arrow_forwardDetermining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Required: 1. Determine the desired post adjustment balance in allowance for doubtful accounts. 2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. 3. Compute bad debt expense. 4. Prepare the adjusting entry to record bad debt expense.arrow_forward
- Average Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: Required: 1. Calculate the average percentage of losses from uncollectible accounts for 2015 through 2018. 2. Assume that the credit sales for 2019 are $1,260,000 and that the weighted average percentage calculated in Requirement 1 is used as an estimate of loses from uncollectible accounts for 2019 credit sales. Determine the bad debt expense for 2019 using the percentage of credit sales method. 3. CONCEPTUAL CONNECTION Do you believe this estimate of bad debt expense is reasonable? 4. CONCEPTUAL CONNECTION How would you estimate 2019 bad debt expense if losses from uncollectible accounts for 2018 were What other action would management consider?arrow_forwardBrown 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 to 30 days old, $12,200; (2) 31 to 90 days old, $5,200; and (3) more than 90 days old, $3,200. For each age group, the average loss rate on the amount of the receivable due to uncollectibility is estimated to be (1) 4 percent, (2) 12 percent, and (3) 15 percent, respectively. At December 31 (end of the current year), the Allowance for Doubtful Accounts balance was $820 (credit) before the end-of-period adjusting entry is made. Required: 1. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. 2. What amount of Bad Debt Expense should be recorded on December 31? 3. If the unadjusted balance in the Allowance for Doubtful Accounts was a $620 debit balance, what amount of Bad Debt Expense should be recorded on December 31? Complete this question by entering your answers in…arrow_forwardChou 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, $276,000; (2) up to 120 days past due, $51,000; and (3) more than 120 days past due, $26,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 4.0 percent, (2) 10 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $400 (credit) before the end-of-period adjusting entry is made. 1. Prepare the appropriate bad debt expense adjusting entry for the current year.2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet.arrow_forward
- Chou 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, $295,000; (2) up to 120 days past due, $55,000; and (3) more than 120 days past due, $18,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2.5 percent, (2) 11 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $100 (credit) before the end-of- period adjusting entry is made. Required: 1. Prepare the appropriate bad debt expense adjusting entry for the current year. 2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet.arrow_forwardBrown 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 to 30 days old, $12,400; (2) 31 to 90 days old, $5,400; and (3) more than 90 days old, $3,400. For each age group, the average loss rate on the amount of the receivable due to uncollectibility is estimated to be (1) 6 percent, (2) 10 percent, and (3) 15 percent, respectively. At December 31 (end of the current year), the Allowance for Doubtful Accounts balance was $840 (credit) before the end-of-period adjusting entry is made. Required: 1. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. 2. What amount of Bad Debt Expense should be recorded on December 31? 3. If the unadjusted balance in the Allowance for Doubtful Accounts was a $640 debit balance, what amount of Bad Debt Expense should be recorded on December 31? Complete this question by entering your answers in…arrow_forwardTwilight Company uses the aging of accounts recelvable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of recelvables of a specific age will not be paid as follows: (1) 2%, (2) 13%, and (3) 34%, respectively. At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtful Accounts was $150. The total Accounts Receivable in each age category were: (1) 1-30 days old, $58,000, (2) 31-90 days old, $19,000, and (3) more than 90 days old, $3,000. Required: a. Calculate the estimate of uncollectible accounts at December 31, 2019. b. Prepare the appropriate adjusting entry dated December 31, 2019.arrow_forward
- Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 1%, (2) 15%, and (3) 36%, respectively. At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtful Accounts was $230. The total Accounts Receivable in each age category were: (1) 1-30 days old, $59,000, (2) 31-90 days old, $11,000, and (3) more than 90 days old, $4,000. Required: a. Calculate the estimate of uncollectible accounts at December 31, 2019. b. Prepare the appropriate adjusting entry dated December 31, 2019. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the estimate of uncollectible accounts at December 31, 2019. Estimated…arrow_forwardChou 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, $295,000; (2) up to 120 days past due, $55,000; and (3) more than 120 days past due, $18,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2.5 percent, (2) 11 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $100 (credit) before the end-of-period adjusting entry is made. Please complete the two tables based on the information above and explian how it was done (fromulas and rules involved), If you can please do the work manually.arrow_forwardTwilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 1%, (2) 17%, and (3) 31%, respectively. At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtful Accounts was $150. The total Accounts Receivable in each age category were: (1) 1-30 days old, $68,000, (2) 31-90 days old, $10,000, and (3) more than 90 days old, $5,000. Required: a. Calculate the estimate of uncollectible accounts at December 31, 2019. b. Prepare the appropriate adjusting entry dated December 31, 2019. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the appropriate adjusting entry dated December 31, 2019. View transaction list…arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning