Outdoor Living has the following accounts receivable at year end, broken down by age: Prior experience has

Question:

Outdoor Living has the following at year end, broken down by age:

Outdoor Living has the following accounts receivable at year end,

Prior experience has shown that the company will probably collect 95% of its current receivables. Furthermore, the collection percentage will fall by 15% for each additional month an account receivable remains outstanding past its due date
Required
Develop an estimate of Outdoor Living's allowance account balance and prepare the journal entry for bad debt expense, assuming that the allowance has an existing
(a) $4,000 credit balance
(b) $1,000 debit balance.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...