Problem 5-84A (Algorithmic) Aging Method Bad Debt Expense

Cindy Bagnal, the manager of Cayce Printing Service, has provided you with the following aging schedule for Cayce's accounts receivable:

Accounts Receivable Category		Amount		Proportion Expected to Default
0-20 days		$85,400		0.02
21-40 days		21,500		0.08
41-60 days		11,700		0.15
Over 60 days		5,300		0.30
		$123,900

Cindy indicates that the $123,900 of accounts receivable identified in the table does not include $8,900 of receivables that should be written off.

2. Determine the desired postadjustment balance in allowance for doubtful accounts, Round each aging category to the nearest dollar.

3. If the balance in allowance for doubtful accounts before the $8,900 write-off was a debit of $450, compute bad debt expense. Prepare the adjusting entry to record bad debt expense.