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Problem 5-85A (Algorithmic) Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance
Problem 5-85A (Algorithmic) Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Accounts Receivable Age Proportion Expected to Default Amount Current $19,200 0.01 5,300 0.02 1-15 days past due 16-45 days past due 3,100 0.08 3,600 0.15 46-90 days past due Over 90 days past due 2,400 0.30 $33,600 Required: 1. Determine the desired postadjustment balance in allowance for doubtful accounts. $ 2. Determine the balance in allowance for doubtful acco before the bad debt expense adjusting entr posted. $ 3. Compute bad debt expense. $ 4. Prepare the adjusting entry to record bad debt expense. Record adjusting entry for bad debt expense estimate
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