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

Question

Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $16,500, (2) up to 120 days past due, $5,500, and (3) more than 120 days past due, $4,100. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2 percent, (2) 14 percent, and (3) 35 percent, respectively. At the end of the current year, the Allowance for Doubtful Accounts balance is $900 (credit) before the end-of-period adjusting entry is made. Required: What amount should be recorded as Bad Debt Expense for the current year? (Enter your answers as a whole percentage (ie, 0.12 should be entered as 12).) Estimated Percentage Uncollectible Estimated Amount Uncollectible Aged Accounts Receivable Not yet due Up to 120 days past due Over 120 days past due Estimated balance in allowance for doubtful accounts Current balance in allowance for doubtful accounts Bad debt expense for the year

Explanation / Answer

Estimated Estimated Aged Accounts receivable percentage Amount uncollectible Uncollectible Not yet due 16,500 2% 330 Up to 120 days past due 5,500 14% 770 over 120 days past due 4,100 35% 1435 Estimated balance in allowance for doubtful accounts 2535 current balance in allowance for doubtful accounts 900 Bad debts expense for the year 1635

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