17, Google receivable is aged on the basis of four time periods as follows uses

Question

17, Google receivable is aged on the basis of four time periods as follows uses the aging approach to estimate bad debt expense. The bala (1) not yet due, $55,000, (2) up 1 61-120 days past due, $47,000 and (4) more than 120 days that for each age group, the average loss rate on the to 60 days past due, $455,000, (3) past due, $25,000. Experience has shown amount of the receivables at year-end due to uncollectability is (1) 2 percen 18 percent and (4) 22 percent, respectively. At December 31, 2015 (end of the the Allowance for Doubtful Accounts balance is $24,330 (credit) before the end-of adjusting entry is made. t, (2) 8 percent, (B) Required Calculate the Bad Debt Expense and show the journal entry to record the expense. Use below to organize work the grid Balance | Estimated % Uncollectible Estimated Amount Uncollectible Not Yet Due Up to 60 days 61-120 Days Over 120 Days Total

Explanation / Answer

Solution:

The allowance for bad debts are recorded in the books of accounts. An allowance for doubt debt is debited with the amount for which the allowance is to be recorded and accounts receivable are reduced and thus reduced.

The total amount of allowance for doubtful debts = $ 51,460.

This is calculated as under -

The journal entry to record the allowance for debt is -

Aged Accounts Receivables $ Balance (1 ) Estimated % Uncollectible (2) Estimated Amount Uncollectible (1) X (2) Not yet due 55,000 2% 1100 Up to 60 days 4,55,000 8% 36400 61-120 Days 47000 18% 8460 Over 120 Days 25000 22% 5500 Total 582,000 51,460

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