E$6-23($Algo$)$ Recording, Reporting, and Evaluating a Bad Debt Estimate Using Aging Analysis LO$6-2$

Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account recelvable is aged on the basis of three time periods as follows: $(1)$ not yet due, $$12,500$; $(2)$ up to $120$ days past due, $$5,500$; and $(3)$ more than $120$ days past due, $$5,000.$ Experience has shown that for each age group, the average loss rate on the amount of the recelvables at year$-$end due to uncollectibility is $(1)4$ percent, $(2)11$ percent, and $(3)25$ percent, respectively. At December $31($end of the current year$),$ the Allowance for Doubtful Accounts balance is $$700($credit$)$ before the end$-$of$-$perlod adjusting entry is made.

Data during the current year follow:

a$.$ Dur$$ng December, an Account Recelvable $($Patty$\text{'}$s Bake Shop$)$ of $$650$ from a prior sale was determined to be uncollectible; therefore, it was written off Immedlately as a bad debt.

b$.$ On December $31,$ the approprlate adjusting entry for the year was recorded.

Requlred:

Give the required journal entrles for the two items Ilsted above.

Show how the amounts related to Accounts Recelvable and Bad Debt Expense would be reported on the Income statement and balance sheet for the current year. Disregard income tax considerations.

Complete this question by entering your answers in the tabs below.

Req $1$

Req $2$ B

Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet for the current year. Disregard income tax comsiderations. $($A mounts to be deducted should be indicated by a minus sign.$)$

$\backslash$table$[[$BROWN COW DAIRY,$],[$Balance Sheet $($Partial$),],[$As of December $31,,],[$Current assets:,,$],[$Accounts receivable,,$],[$Allowance for doubtful accounts,,$],[,,],[,,]]$