Problem 5-85A (Algorithmic) 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:

Accounts Receivable Age		Amount		Proportion Expected to Default
Current		$18,500		0.01
115 days past due		5,300		0.02
1645 days past due		3,100		0.08
4690 days past due		3,600		0.15
Over 90 days past due		2,400		0.30
		$32,900

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.

	Record adjusting entry for bad debt expense estimate