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.

Accounts Receivable Category Amount Proportion Expected to Default Within discount period $384,500 0.004 1–30 days past discount period 187,600 0.015 31–60 days past discount period 41,800 0.085 Over 60 days past discount period 21,400 0.200 Before adjusting entries are entered, the balance in the allowance for doubtful accounts is a debit of $7,213.

Required:

. Calculate the desired postadjustment balance in Perkinson’s allowance for doubtful accounts.

. Determine bad debt expense for the year.

Exercise