Damon Company performs an aging analysis to determine the amount of its bad debts expense to...
Damon Company performs an aging analysis to determine the amount of its bad debts expense to record at the end of each year. At the end of the current year, Damon's aging schedule appeared as follows:
|
Amount |
Fraction expected to be uncollectible |
|
|
Current receivables |
$12,000 |
1% |
|
Past-due receivables |
||
|
1-30 days |
2,650 |
2% |
|
31-60 days |
4,050 |
6% |
|
61-90 days |
980 |
25% |
|
91+ days |
630 |
40% |
The balance in Damon's Allowance for Doubtful Accounts was $260
negative (i.e.: the bad debt expense in the prior period had been
under estimated).
Using the information above, what is the amount of Damon’s bad debt expense for the year?
| a. |
$ 815 |
|
| b. |
$2,443 |
|
| c. |
$ 913 |
|
| d. |
$1,173 |
Homework Answers
Ending balance in allowance for doubtful accounts = ($12,000 * 1%) + ($2,650 * 2%) + ($4,050 * 6%) + ($980 * 25%) + ($630 * 40%)
= $120 + $53 + $243 + $245 + $252
= $913
Bad debt expense for the year = Ending balance in allowance for doubtful accounts + Negative balance in the allowance for doubtful accounts
= $913 + $260
= $1,173
The answer is Option d.
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Damon Company performs an aging analysis to determine the amount
of its bad debts expense to...
Damon Company performs an aging analysis to determine the amount of its bad debts expense to...
Damon Company performs an aging analysis to determine the amount of its bad debts expense to record at the end of each year. At the end of the current year, Damon's aging schedule appeared as follows: Amount Fraction expected to be uncollectible Current receivables $12,000 1% Past-due receivables 1-30 days 2,650 2% 31-60 days 4,050 6% 61-90 days 980 25% 91+ days 630 40% The balance in Damon's Allowance for Doubtful Accounts was $260 negative (i.e.: the bad debt expense in...
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