Casilda Company uses the aging approach to estimate bad debt expense The balance

ID: 2478681 • Letter: C

Question

Casilda Company uses the aging approach to estimate bad debt expense The balance of each account resettable is aged on the basis of three time periods as Mows (1) not yet due. $50,000. (2) up to 180 days past due $14,000. and (3) more than 180 days past due. $4.000 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 percent (2) 12 percent, and (3) 30 percent, respectively Al December 31. 2011 (end of the current year), the Allowance for Doubtful Accounts balance is $200 (credit) before the end-of-period adjusting entry is made

Explanation / Answer

Income and expenses a/c Dr. 4180(4380-200)

To allowance for bad-debts a/c 4180

Account receivable 68000

Less allowance for doubtful accounts - - 4380

Accounts receivables net of allowance for bad debts 63620

balance

Average loss rate

Bad-debts allowance

Not yet due

50000

1500

upto 180 days

14000

12%

1680

More than 180 days past due

4000

30%

1200

68000

4380