Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end of each accounting year.
At December 31, 2014 (end of the current accounting year), the Accounts Receivable balance was $48,700, and the Allowance for Doubtful Accounts balance was $920 (credit). In determining which accounts have been paid, the company applies collections to the oldest sales first. To simplify, only five customer accounts are used; the details of each on December 31, 2014, follow:
1. Compute the total accounts receivable in each age category.
2. Compute the estimated uncollectible amount for each age category and in total.
3. Give the adjusting entry for bad debt expense at December 31, 2014.
4. Show how the amounts related to accounts receivable should be presented on the 2014 income statement and balancesheet.
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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