Aging Receivables and Bad Debt Expense Perkinson Corporation sells paper products to a large number of retailers. Perkinson's accountant has prepared the following aging schedule for its accounts receivable at the end of the year. Accounts Receivable Category Amount Proportion Expected to Default Within discount period $384,500 0.004 1–30 days past discount period 187,600 0.015 31–60 days past discount period 41,800 0.085 Over 60 days past discount period 21,400 0.200 Before adjusting entries are entered, the balance in the allowance for doubtful accounts is a debit of $7,456. Required: 1. Calculate the desired postadjustment balance in Perkinson's allowance for doubtful accounts. $fill in the blank 1 2. Determine bad debt expense for the year. $fill in the blank 2
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Aging Receivables and
Perkinson Corporation sells paper products to a large number of retailers. Perkinson's accountant has prepared the following aging schedule for its
| Accounts Receivable Category | Amount | Proportion Expected to Default | ||
| Within discount period | $384,500 | 0.004 | ||
| 1–30 days past discount period | 187,600 | 0.015 | ||
| 31–60 days past discount period | 41,800 | 0.085 | ||
| Over 60 days past discount period | 21,400 | 0.200 |
Before
Required:
1. Calculate the desired postadjustment balance in Perkinson's allowance for doubtful accounts.
$fill in the blank 1
2. Determine bad debt expense for the year.
$fill in the blank 2
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