Question
E6-14 (Algo) Recording and Reporting a Bad Debt Estimate Using Aging Analysis LO6-2 Casilda Company uses the aging approach to estimate bad debt expense. The
E6-14 (Algo) Recording and Reporting a Bad Debt Estimate Using Aging Analysis LO6-2
Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $50,800; (2) up to 180 days past due, $15,600; and (3) more than 180 days past due, $4,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2 percent, (2) 11 percent, and (3) 31 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $100 (credit) before the end-of-period adjusting entry is made.
Required:
- Prepare the appropriate bad debt expense adjusting entry for the current year.
- Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet.
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