At the end of its first year of operations, December 31, 2013, Felicity Ltd.’s accounts show the following amounts:

Accounts receivable……………………………………………………..........................…………..$789,000

Allowance for doubtful accounts (prior to any adjusting or closing entries)……...12,000 dr

Customer accounts written off as uncollectible during 2013…………………....……...18,000

Bad debts expense for 2013 (prior to any adjusting or closing entries)……...……..62,000 dr

Felicity estimates the following percentages of accounts receivable will not be collectible:

Required:

What should be the amount of bad debts expense for the year ended December 31, 2013?

Transcribed Image Text:

Days outstanding Amount % not collectible 0-30 Total 76-120 345,000 133,000 175,000 136,000 789,000 12% 31-75 120 + 2% 6% 20%