Determining Bad Debt Expense Using the Aging Method}

At the beginning of the year, Lennon Electronics had an accounts receivable balance of \(\$ 29,800\) and a balance in the allowance for doubtful accounts of \(\$ 2,425\) (credit). During the year, Lennon had credit sales of \(\$ 752,693\), collected accounts receivable in the amount of \(\$ 653,800\), wrote off \(\$ 20,400\) of accounts receivable, and had the following data for accounts receivable at the end of the period:

Lennon has a December 31 year-end.
\section*{Required:}
1. Determine the desired postadjustment balance in allowance for doubtful accounts.
2. Determine the preadjustment 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.

Problem

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Accounts Receivable Category Current Amount Proportion Expected to Default $22,700 0.01 1-15 days past due 8,600 0.04 16-45 days past due 4,900 0.09 46-90 days days past due 3,200 0.17 Over 60 days 2,100 0.30 $41.500