AP6-3 (Static) Determining Bad Debt Expense Based on Aging Analysis LO6-2 [The following information applies to the questions displayed below.] Assume that Briggs & Stratton Engines Incorporated uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms n/45. The balance of each account receivable is aged on the basis of four time periods as follows: (1) not yet due. (2) up to 6 months past due, (3) 6 to 12 months past due, and (4) more than 1 year past due. Experience has shown that for each age group, the average loss rate on the amount of the receivable at year-end due to uncollectibility is (a) 1 percent, (b) 5 percent, (c) 20 percent, and (d) 50 percent, respectively. At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $39.500 and the Allowance for Doubtful Accounts balance was $1,550 (credit). In determining which accounts have been paid, the company applies collections to the oldest sales first. To simplify, only five customer accounts are used; the details of each on December 31, 2022, follow: Date 03/13/2022 05/12/2022 09/30/2022 Date 11/01/2021 06/01/2022 12/01/2022 Date 10/31/2022 12/10/2022 Date 05/02/2022 06/01/2022 06/15/2022 17/15/2022 10/01/2022 11/15/2022 12/15/2022 Date 12/30/2022 R. Devens-Account Explanation Sale Collection Collection Sale Collection Collection Sale Collection C. Howard-Account Receivable Explanation Explanation Sale Sale Receivable Collection Collection Sale Collection Sale Debit 19,000 D. McClain-Account Receivable Explanation Explanation Sale Debit 31,000 Debit 12,000 T. Skibinski-Account Receivable Debit 15,000 10,000 H. Wu-Account Receivable Debit Credit 10,000 7,000 26,000 4,500 Credit 13,000 20,000 5,000 Credit 8,000 Credit 15,000 10,000 16,000 Credit Balance 19,000 9,000 2,000 Balance 31,000 11,000 6,000 Balance 12,000 4,000 Balance 15,000 25,000 10,000 26,000 10,000 14,500 Balance 13,000
AP6-3 (Static) Determining Bad Debt Expense Based on Aging Analysis LO6-2 [The following information applies to the questions displayed below.] Assume that Briggs & Stratton Engines Incorporated uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms n/45. The balance of each account receivable is aged on the basis of four time periods as follows: (1) not yet due. (2) up to 6 months past due, (3) 6 to 12 months past due, and (4) more than 1 year past due. Experience has shown that for each age group, the average loss rate on the amount of the receivable at year-end due to uncollectibility is (a) 1 percent, (b) 5 percent, (c) 20 percent, and (d) 50 percent, respectively. At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $39.500 and the Allowance for Doubtful Accounts balance was $1,550 (credit). In determining which accounts have been paid, the company applies collections to the oldest sales first. To simplify, only five customer accounts are used; the details of each on December 31, 2022, follow: Date 03/13/2022 05/12/2022 09/30/2022 Date 11/01/2021 06/01/2022 12/01/2022 Date 10/31/2022 12/10/2022 Date 05/02/2022 06/01/2022 06/15/2022 17/15/2022 10/01/2022 11/15/2022 12/15/2022 Date 12/30/2022 R. Devens-Account Explanation Sale Collection Collection Sale Collection Collection Sale Collection C. Howard-Account Receivable Explanation Explanation Sale Sale Receivable Collection Collection Sale Collection Sale Debit 19,000 D. McClain-Account Receivable Explanation Explanation Sale Debit 31,000 Debit 12,000 T. Skibinski-Account Receivable Debit 15,000 10,000 H. Wu-Account Receivable Debit Credit 10,000 7,000 26,000 4,500 Credit 13,000 20,000 5,000 Credit 8,000 Credit 15,000 10,000 16,000 Credit Balance 19,000 9,000 2,000 Balance 31,000 11,000 6,000 Balance 12,000 4,000 Balance 15,000 25,000 10,000 26,000 10,000 14,500 Balance 13,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Question
![AP6-3 (Static) Determining Bad Debt Expense Based on Aging Analysis LO6-2
[The following information applies to the questions displayed below.]
Assume that Briggs & Stratton Engines Incorporated uses the aging approach to estimate bad debt expense at the end of
each accounting year. Credit sales occur frequently on terms n/45. The balance of each account receivable is aged on the
basis of four time periods as follows: (1) not yet due. (2) up to 6 months past due. (3) 6 to 12 months past due, and (4) more
than 1 year past due. Experience has shown that for each age group, the average loss rate on the amount of the
receivable at year-end due to uncollectibility is (a) 1 percent. (b) 5 percent, (c) 20 percent, and (d) 50 percent, respectively.
At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $39,500 and the
Allowance for Doubtful Accounts balance was $1,550 (credit). In determining which accounts have been paid, the
company applies collections to the oldest sales first. To simplify, only five customer accounts are used; the details of each
on December 31, 2022, follow:
Date
03/13/2022
05/12/2022
09/30/2022
Date
11/01/2021
06/01/2022
12/01/2022
Date
10/31/2022
12/10/2022
Date
05/02/2022
06/01/2022
06/15/2022
17/15/2022
10/01/2022
11/15/2822
12/15/2022
Date
12/30/2022
R. Devens-Account Receivable
Explanation
Sale
Collection
Collection
Sale
Collection
Collection
C. Howard-Account Receivable
Explanation
Explanation
Debit
Sale
Sale
Collection
Collection
Sale
Collection
Sale
19,000
Explanation
Sale
Debit
31,000
D. McClain-Account Receivable
Explanation
Sale
Collection
Debit
12,000
T. Skibinski-Account Receivable
Debit
15,000
10,000
26,000
4,500
H. Wu-Account Receivable
Credit
Debit
10,000
7,000
13,000
Credit
20,000
5,000
Credit
8,000
Credit
15,000
10,000
16,000
Credit
Balance
19,000
9,000
2,000
Balance
31,000
11,000
6,000
Balance
12,000
4,000
Balance
15,000
25,000
10,000
@
26,000
10,000
14,500
Balance
13,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8a323ef2-7c7b-4121-8941-c28249cc0325%2Fd55e1467-d021-43aa-a7ec-7fdae07cf9d1%2Ffpjd2f_processed.png&w=3840&q=75)
Transcribed Image Text:AP6-3 (Static) Determining Bad Debt Expense Based on Aging Analysis LO6-2
[The following information applies to the questions displayed below.]
Assume that Briggs & Stratton Engines Incorporated uses the aging approach to estimate bad debt expense at the end of
each accounting year. Credit sales occur frequently on terms n/45. The balance of each account receivable is aged on the
basis of four time periods as follows: (1) not yet due. (2) up to 6 months past due. (3) 6 to 12 months past due, and (4) more
than 1 year past due. Experience has shown that for each age group, the average loss rate on the amount of the
receivable at year-end due to uncollectibility is (a) 1 percent. (b) 5 percent, (c) 20 percent, and (d) 50 percent, respectively.
At December 31, 2022 (end of the current accounting year), the Accounts Receivable balance was $39,500 and the
Allowance for Doubtful Accounts balance was $1,550 (credit). In determining which accounts have been paid, the
company applies collections to the oldest sales first. To simplify, only five customer accounts are used; the details of each
on December 31, 2022, follow:
Date
03/13/2022
05/12/2022
09/30/2022
Date
11/01/2021
06/01/2022
12/01/2022
Date
10/31/2022
12/10/2022
Date
05/02/2022
06/01/2022
06/15/2022
17/15/2022
10/01/2022
11/15/2822
12/15/2022
Date
12/30/2022
R. Devens-Account Receivable
Explanation
Sale
Collection
Collection
Sale
Collection
Collection
C. Howard-Account Receivable
Explanation
Explanation
Debit
Sale
Sale
Collection
Collection
Sale
Collection
Sale
19,000
Explanation
Sale
Debit
31,000
D. McClain-Account Receivable
Explanation
Sale
Collection
Debit
12,000
T. Skibinski-Account Receivable
Debit
15,000
10,000
26,000
4,500
H. Wu-Account Receivable
Credit
Debit
10,000
7,000
13,000
Credit
20,000
5,000
Credit
8,000
Credit
15,000
10,000
16,000
Credit
Balance
19,000
9,000
2,000
Balance
31,000
11,000
6,000
Balance
12,000
4,000
Balance
15,000
25,000
10,000
@
26,000
10,000
14,500
Balance
13,000
Transcribed Image Text: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 fleld.
View transaction list
Journal entry worksheet
< 1
Record the journal entry for bad debt expense at December 31, 2022.
Note: Enter debits before credits.
Transaction
1
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
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