Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end of eachaccounting year. Credit sales occur frequently on terms n/60. The balance of each account receivable isaged on the basis of three time periods as follows: (1) not yet due, (2) up to one year past due, and (3) morethan one year past due. Experience has shown that for each age group, the average loss rate on the amountof the receivable at year-end due to uncollectibility is (a) 4 percent, (b) 10 percent, and (c) 29 percent,respectively.At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $49,800and the Allowance for Doubtful Accounts balance was $990 (credit). In determining which accounts havebeen paid, the company applies collections to the oldest sales first. To simplify, only five customer accountsare used; the details of each on December 31, 2022, follow:B. Brown-Account ReceivableDate Explanation Debit Credit Balance03/11/2021 Sale13,90006/30/2021 Collection01/31/2022 Collection13,9003,900 10,0003,100 6,900D. Donalds-Account ReceivableDate Explanation Debit CreditBalance02/28/2022 Sale21,90021,90004/15/2022 Collection7,700 14,2005,800 8,40011/30/2022 CollectionN. Napier-Account ReceivableDate Explanation Debit CreditBalance11/30/2022 Sale8,4008,40012/15/2022 Collection1,400 7,000S. Strothers-Account ReceivableDateExplanation Debit Credit Balance03/02/2020 Sale5,50004/15/2020 Collection5,50009/01/2021 Sale9,00010/15/2021 Collection02/01/2022 Sale21,00003/01/2022 Collection5,50009,0004,900 4,10025,1005,500 19,60012/31/2022 Sale3,20022,800T. Thomas-Account ReceivableDate Explanation Debit Credit Balance12/30/2022 Sale4,7004,700P6-3 Part 33. Prepare the adjusting entry for bad debt expense at December 31, 2022.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.View transaction listJournal entry worksheet<1Record the adjusting entry for bad debt expense atDecember 31, 2022.Note: Enter debits before credits.Transaction1.General JournalDebitCredit

Accounts receivable is the total amount that is to be received from a customer in exchange for goods…

Answered: 3. Prepare the adjusting entry for bad…

3. Prepare the adjusting entry for bad debt expense at December 31, 2022. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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, $50,100; (2) up to 180 days past due, $15,300; and (3) more than 180 days past due, $4,500. 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) 4 percent, (2) 12 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $400 (credit) before the end-of-period adjusting entry is made. Required: 1. Prepare the appropriate bad debt expense adjusting entry for the current year. 2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet Complete this question by entering your answers in the tabs below.
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H1.
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