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Question 5 (6 Marks) Sam's Auto Parts uses the aging method to estimate bad debt expense. At the end of 2018, the company had an
Question 5 (6 Marks) Sam's Auto Parts uses the aging method to estimate bad debt expense. At the end of 2018, the company had an accounts receivable balance of $102,100 and a credit balance in the allowance for doubtful accounts of $9,180 (before year end adjustments). The company had the following analysis of accounts receivable at the end of 2018: Expected to Default 2% 3% Accounts Receivable Age Current 1-15 days past due 16-45 days past due 46-90 days past due Over 90 days past due Amount Proportion $ 60,000 21, 500 3,700 3,600 13, 300 $ 102,100 7% 15% 25% Sam's Auto Parts has a December 31 year end. Required: a) Calculate the desired ending balance of the allowance for doubtful accounts at the end of the year. (4 marks) b) What is the bad debt expense for the year? (2 marks)
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