Estimating Bad Debts Expense - Blank

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					                         ESTIMATING BAD DEBTS EXPENSE


1. A company estimates bad debt expense to be .5% of credit Sales. It is now the end of the
   fiscal year (December 31) and the sales for the past 12 months have been $470,000. The
   balance in the Allowance for Doubtful Accounts is $300 credit.

   a) Which approach is being used to estimate the bad debt expense?


   b) Show how you will calculate the bad debt expense for the 12-month period.




   c) Record the year-end adjusting journal entry to record the estimated bad debt.


       Date                          Accounts                          Debit          Credit




2. A company estimates bad debt expense to be 3.2% of Accounts Receivable. The year-end is
   October 31. Today’s date is October 31 and the Accounts Receivable for the past 12 months
   is $650,000. The balance in Allowance for Doubtful Accounts is $300 credit.


   a) Which approach is being used to estimate the bad debt expense?


   b) Show how you will calculate the bad debt expense for the 12-month period.




   c) Record the year-end adjusting journal entry to record the estimated bad debt.


       Date                          Accounts                          Debit          Credit
3. A company estimates bad debt expense to be 4.2% of Accounts Receivable. The year-end is
   April 30. Today’s date is April 30 and the Accounts Receivable for the past 12 months is
   $825,000. The balance in Allowance for Doubtful Accounts is $200 debit.


   a) Which approach is being used to estimate the bad debt expense?


   b) Show how you will calculate the bad debt expense for the 12-month period.




   c) Record the year-end adjusting journal entry to record the estimated bad debt.


       Date                          Accounts                          Debit          Credit




4. A company estimates bad debt expense using an Aging Analysis of Accounts Receivable.
   The year-end is November 30. Today’s date is November 30. Total Accounts Receivable
   for the past 12 months is $650,000. Half of the A/R is over 90 days overdue and we expect
   that 5% of this half will become a bad debt. We estimate that 2% of the remaining A/R will
   be uncollectible. The balance in Allowance for Doubtful Accounts is $100 credit.


   a) Which approach is being used to estimate the bad debt expense?


   b) Show how you will calculate the bad debt expense for the 12-month period.




   c) Record the year-end adjusting journal entry to record the estimated bad debt.


       Date                          Accounts                          Debit          Credit

				
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