Estimating Bad Debts Expense - Blank by keralaguest

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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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