DETERMINING BAD DEBT EXPENSE USING THE AGING METHOD At the beginning of the year, Tennyson Auto Parts

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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.

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Cornerstones Of Financial Accounting Current Trends Update

ISBN: 9781111527952

1st Edition

Authors: Jay Rich , Jeff Jones, Maryanne Mowen , Don Hansen

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