EXERCISE 3

Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2015, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:

Estimated Percentage

Uncollectible

Current Accounts$120,000 1%

1-30 days past due20,000 3%

31-60 days past due10,000 6%

61-90 days past due10,000 12%

Over 90 days past due8,000 30%

Total Accounts Receivable$168,000

Instructions

(a)Determine the amount to recognize as bad debt expense on December 31, 2015.

(b)Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year's provision for uncollectible accounts. What is the amount of bad debt expense to recognize for the year

(c)What is the amount that is reported as the net balance for Accounts Receivable as of December 31, 2015?