Davis Company had a $700 credit balance in Allowance for Doubtful Accounts at De
ID: 2409886 • Letter: D
Question
Davis Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2015, before the current year’s provision for uncollectible accounts. An aging of the accounts receivable reveled the following:
Estimated % Uncollectible
Current Accounts $120,000 1%
1-30 days past due 20,000 3%
31-60 days past due 10,000................................ 6%
61-90 days past due 10,000...................................12%
Over 90 days past due 8,000.....................................30%
Total Accounts Receivable 168,000
Determine the amount to recognize as bad debt expense on December 31, 2015.
Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year’s provision for uncollectible accounts. What is the amount of bad debt expense to recognize for the year.
What is the amount that is reported as the net balance for Accounts Receivable as of December 31, 2015?
Explanation / Answer
Debit Credit A Bad Debt Expense 5,300 Allowance for Doubtful Accounts 5,300 ($6,000 – $700) B Bad Debt Expense 6,500 Allowance for Doubtful Accounts 6,500 ($6,000 + $500) C 168,000 - 6500 = 161,500
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