Question

Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $50,600; (2) up to 180 days past due, $14,600; and (3) more than 180 days past due, $5,900. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 3 percent, (2) 12 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $100 (credit) before the end-of-period adjusting entry is made. Required: 1. Prepare the appropriate bad debt expense adjusting entry for the current year. 2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate bad debt expense adjusting entry for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the adjusting journal entry for bad debt expense. Note: Enter debits before credits. General Journal Debit Credit Date December 31 Record entry Clear entry View general journal

Answer 1

Calculation of bad debt expenses
not yet due				50600*3%	1518
up to 180 day due				14600*12%	1752
more than 180 days due				5900*30%	1770
Total					5040
less: credit balance of doubtful account					100
Bad debt expense					4940
Journal entries
Particulars				Debit	Credit
Bad debt expense				4940
allowance for doubtful account					4940
(to record bad debt expense)
2)
Current assets:
accounts receivable					71100
less: allowance for doubtful account					5040
accounts receivable net of allowance for doubtful account						66060

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