Crimson Inc. recorded credit sales of $784,000, of which $540,000 is not yet due, $160,000 is...
Crimson Inc. recorded credit sales of $784,000, of which $540,000 is not yet due, $160,000 is past due for up to 180 days, and $84,000 is past due for more than 180 days. Under the aging of receivables approach, Crimson Inc. expects it will not collect 5% of the amount not yet due, 18% of the amount past due for up to 180 days, and 24% of the amount past due for more than 180 days. The allowance account had a debit balance of $1,500 before adjustment. After adjusting for bad debt expense, what is the ending balance of the allowance account?
Homework Answers
Bad debt expense = $540,000*5% + 160,000*18% + 84,000*24%
Bad debt expense = $27,000 + 28,800 + 20,160 = $75,960
Ending balance of allowance account = $1,500 + 75,960 = $77,460
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Crimson Inc. recorded credit sales of $784,000, of which
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Lin’s Dairy 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,
$22,000; (2) up to 120 days past due, $6,500; and (3) more than 120
days past due, $2,800. 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) 14...
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