Company ABC had credit sales of $400,000 during the month of July. At the end of July, an examination into their A/R showed that the total balance was $350,000 broken down as follows:

Current $200,000
1-30 Days Past Due 80,000
31-60 Days Past Due. 40,000
61-90 Days Past Due 20,000
Greater Than 90 Days 10,000

The expectations, based on analysis of historical A/R is that 99% of the current A/R is collectible, 90% of the 1-30 days, 80% of the 31-60 days, 60% of the 61-90 days and 20% of the greater than 90 days.

If ABC uses the percentage of sales methodology of providing for bad debts, the estimate is used is 10% of credit sales are uncollectible.

For Questions 1-4, assume the current balance in the Allowance for Doubtful Accounts is a $5,000 Credit.

For Questions 5-8, assume the current balance in the Allowance for Doubtful Accounts is a $5,000 Debit.

1.

If ABC uses the Percentage of Sales Methodology of providing for bad debt expense, what would be the increase to Bad Debt Expense as a result of July Sales?

2.

If ABC uses the Percentage of Sales Methodology of providing for bad debt expense, what is the balance in the Allowance for Doubtful Accounts AFTER the bad debt expense entry in July?

3.

If ABC uses the Aging of A/R to provide for bad debt expense, what is the increase to Bad Debt Expense in July based on the information provided?

4.

If ABC uses the Aging of A/R to provide for bad debt expense, what is the balance in the Allowance for Doubtful Accounts AFTER the bad debt expense entry in July?

5.

If ABC uses the Percentage of Sales Methodology of providing for bad debt expense, what would be the increase to Bad Debt Expense as a result of July Sales? USE the NEW DATA!

6.

If ABC uses the Percentage of Sales Methodology of providing for bad debt expense, what is the balance in the Allowance for Doubtful Accounts AFTER the bad debt expense entry in July? USE the NEW DATA!

7.

If ABC uses the Aging of A/R to provide for bad debt expense, what is the increase to Bad Debt Expense in July based on the information provided? USE the NEW DATA!

8.

If ABC uses the Aging of A/R to provide for bad debt expense, what is the balance in the Allowance for Doubtful Accounts AFTER the bad debt expense entry in July? USE the NEW DATA!

9.

If ABC had to write off a $4,000 customer account due to uncollectibility, what would be the impact on bad debt expense?

10. If ABC had a $25,000 balance in the Allowance for Doubtful Accounts and had to write off a $4,000 customer account due to uncollectibility, what would be the new balance in the Allowance for Doubtful Accounts?