value 4.00 points Chou Company uses the aging approach to estimate bad debt expe

Question

value 4.00 points Chou 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, $278,000, (2) up to 120 days past due, $52,000, and (3) more than 120 days past due, $28,000. 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) 3.0 percent, (2) 10 percent, and (3) 32 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $300 (credit) before the end-of-period adjusting entry is made Required: 1. Prepare the appropriate bad debt expense adjusting journal entry for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the adjusting journal entry for bad debt expense Note: Enter debits before credits Date General Journal Debit Credit December 31 Record entry Clear entry View general journal 2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance shee. (Amounts to be deducted should be indicated by a minus sign.) CHOU COMPANY Partial Balance Sheet As of December 31 Accounts receivable, net of allowance for doubtful accounts

Explanation / Answer

Accounts Receivables Amount $ Allowances for Doubtful Debts % Amount Not Yet due 278000 3% 8340 Upto 120 days past due 52000 10% 5200 More than 120days past dues 28000 32% 8960 Total 358000 22500 Journal Entry Bad Debts Expenses A/c Debit            22500 Allowances fro Doubtful Debts A/c    Credit               22500 (To allwances made for doubtful accounts receivables) Financial Presentation Accounts Receivables 358000 Less: Allowances for Doubtful Debts -22500 Accounts Receivables Net of Doubtful Debts 335500

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