DETERMINING BAD DEBT EXPENSE USING THE AGING METHOD At the beginning of the year, Tennyson Auto Parts
Question:
DETERMINING 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:
Accounts Receivable Age Amount Proportion Expected to Default Current $20,400 0.01 1–15 days past due 5,300 0.02 16–45 days past due 3,100 0.08 46–90 days past due 3,600 0.15 Over 90 days past due 2,400 0.30
$34,800 Required:
. Determine the desired postadjustment balance in allowance for doubtful accounts.
. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted.
. Compute bad debt expense.
. Prepare the adjusting entry to record bad debt expense.
Step by Step Answer:
Cornerstones Of Financial Accounting Current Trends Update
ISBN: 9781111527952
1st Edition
Authors: Jay Rich , Jeff Jones, Maryanne Mowen , Don Hansen