Determining Bad Debt Expense Using the Aging Method

At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period:

Required:

1. Determine the desired postadjustment balance in allowance for doubtful accounts. $

2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. $

3. Compute bad debt expense. $

4. Prepare the adjusting entry to record bad debt expense.

	Account and Explanation	Debit	Credit
	Record adjusting entry for bad debt expense estimate

Accounts Receivable Age Current 1-15 days past due 16-45 days past due 46-90 days past due over 90 days past due Amount $20,400 5,300 3,100 3,600 2,400 $34,800 Proportion Expected to Default 0.01 0.02 0.08 0.15 0.30