Question $5$

You are an accountant at Company XYZ$,$ which has a fiscal year ending on December $31.$ It is now December $31,2022,$ and you are getting ready to record the adjusting journal entry for this year's bad

debt expense. The credit department has prepared for you a list of your accounts receivables with their respective ages.

The credit department estimates the following percentage of uncollectible accounts receivable by age:

You then inspect the accounting records for the year and note that during the year, the company had write$-$offs of $$60,400$ and recoveries of $$250.$ The beginning of the year's Allowance for Doubtful

Accounts $($AFDA$)$ had a credit balance of $$54,900.$

You also note that total credit sales during the year were $$6,810,000.$ The credit department informs you that historically, $1\mathrm{.}25\%$ of credit sales have proven to be uncollectible.

a$)$ Using the aging method of estimating uncollectible accounts, what is the ending balance for the Allowance for Doubtful Accounts and the resulting Bad Debt Expense for the year? Use the

following numeric format $12345($no dollar signs or commas$).$ Round to the nearest dollar.

Allowance for Doubtful Accounts $-$ Ending Balance $(12/31)$

Bad Debt Expense

b$)$ Suppose that XYZ company uses the percent of sales method to estimate uncollectible accounts. What is the bad debt expense for the year and the resulting Allowance for Doubtful Accounts $-$

ending balance? Use the following numeric format $12345($no dollar signs or commas$).$ Round to the nearest dollar.

Bad Debt Expense