Brown Cow Dairy uses the aging approach to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) 1 to 30 days old, $12,000; (2) 31 to 90 days old, $5,000; and (3) more than 90 days old, $3,000. Experience has shown that for each age group, the average loss rate on the amount of the receivable due to uncollectibility is (1) 3 percent, (2) 15 percent, and (3) 30 percent, respectively. At December 31 (end of the current year), the Allowance for Doubtful Accounts balance was $800 (credit) before the end-of-period adjusting entry is made. Required: 1. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. 2. What amount should be recorded as Bad Debt Expense for the current year? If the unadjusted balance in the Allowance for Doubtful Accounts was a $600 debit balance, what would be the amount of Bad Debt Expense on December 31? The Kraft Heinz Company was formed in 2015 with the merger of Kraft Foods and H.J. Heinz Corporation. Assume the company reported the following amounts in its unadjusted trial balance (in millions) as of December 31, 2020: Required: 1. Assume Kraft Heinz uses 1/2 of 1 percent of sales to estimate its Bad debt expense for the year. Prepare the adjusting journal entry required for the year, assuming no Bad debt expense has been recorded yet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to the nearest whole dollar number. Journal entry worksheet Note: Enter debits before credits. 2. Assume instead that Kraft Heinz uses the aging of accounts receivable method and estimates that $233 million of its Accounts Receivable will be uncollectible. Prepare the adjusting journal entry required at December 31, 2020, for recording Bad Debt Expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions.) Journal entry worksheet Note: Enter debits before credits. 3. Assume instead that Kraft Heinz uses the aging of accounts receivable method and estimates that $233 million of its Accounts Receivable will be uncollectible. Also, assume that the unadjusted balance in Kraft Heinz's Allowance for Doubtful Accounts at December 31, 2020, was a debit balance of $20 million. Prepare the adjusting journal entry required at December 31,2020 , for recording bad debt expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions.) Journal entry worksheet Note: Enter debits before credits
