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E6-14(Algo) Recording and Reporting a Bad Debt Estimate Using Aging Analysis LO6-2 Casilda...

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Accounting

E6-14(Algo) Recording and Reporting a Bad Debt Estimate Using Aging Analysis LO6-2
Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $50,400; (2) up to 180 days past due, $14,600; and (3) more than 180 days past due, $4,400. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1)3 percent, (2)12 percent, and (3)31 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $500(credit) before the end-of-period adjusting entry is made.
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