Recording and Reporting aBadDebtEstimateUsing AgingAnalysis
Frederick Company uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $275,000. (2) up to 120 days past due. $50,000.and (3) more than 120days past due, $20,000.Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 3.5 percent, (2) 10 percent, and (3, 30 percent, rcpcctivcly. At December 31, 2011 (end of the current year), the Allowance for Doubtful Accounts balance is $400 (cred it) before the end-of- period adjusting entry is made.
Required:
I. Prepare the appropriate bad debt expense adjusting entry for the year 2012.
2. Show how the various accounts related to accounts receivable should be shown on the December 31.2012, balance sheet.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.