lab 8/ Chapter 8

question 3

Brown Cow Dairy uses the aging approsch to estimate Bad Debt Expense The bolance of each account receivable is aged on the basis of three time periods as follows (f) to 30 days cll, $12,000; (2) 31 to 90 days old, $5,000; and (3) more than 90 days old. \$3,000. Expenence has shown that for each age group, the average loss rate on the amount of the rece|vable due to uncollectibity is (1) 3 percent, (2) 15 percent, and (3) 30 percent, respect vely At Decomber 31 fend of the current year), the Allowance for Doubtul Accounts balance was $800 (creda before the end-ofperiod adfunting entry is made Required: 1. Pregare a schedule to estimate an approprlate year-end balance for the Alowance for Doubtrul Accounts 2. What amount sheuld be recorded as Bad Debt Expense for the current year? 3. If the unadjusted belance in the Aliowance for Doubtful Accounts was in 600 debit bolance, what would be the amount of Bod Debt Expense on December 31