Question

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 $90,800 0.02 21-40 days 21,500 0.08 41-60 days 11,700 0.15 Over 60 days 5,300 0.30 $129,300 Cindy indicates that the $129,300 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.

Answer 1

Req 2.
Age		AR	Expected Uncoll.	Desired Post adjustment Allowance
0-20 days		90800	0.02		1816
21-40 days	21500	0.08		1720
41-60 days	11700	0.15		1755
Over 60 days	5300	0.3		1590
Desired Post-adjustment balance of Allowance	6881
Req 3.
Debit balance of Allowance			450
Add: Amount written off			8900
Net debit balance of Allowance			9350
Add: Desired balance of Allowance		6881
Bad debts expense				16231