Question

Outdoor Living has the following accounts receivable at year end, broken down by age:
Prior experience has shown that the company will probably collect 95% of its current receivables. Furthermore, the collection percentage will fall by 15% for each additional month an account receivable remains outstanding past its due date
Required
Develop an estimate of Outdoor Living's allowance account balance and prepare the journal entry for bad debt expense, assuming that the allowance has an existing
(a) $4,000 credit balance
(b) $1,000 debit balance.


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  • CreatedJuly 16, 2015
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