Lin’s Dairy uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $22,000, (2) up to 120 days past due, $6,500, and (3) more than 120 days past due, $2,800. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 3 percent, (2) 14 percent, and (3) 34 percent, respectively. At December 31, 2014 (end of the current year), the Allowance for Doubtful Accounts balance is $1,200 (credit) before the end-of-period adjusting entry is made.

What amount should be recorded as Bad Debt Expense for the current year?

  • CreatedJuly 01, 2014
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