Chou 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, $295,000; (2) u to 120 days past due, $55,000; and (3) more than 120 days past due, $18,000. Experience has shown tha for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2.5 percent, (2) 11 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $100 (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.

Chou 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, $295,000; (2) u to 120 days past due, $55,000; and (3) more than 120 days past due, $18,000. Experience has shown tha for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2.5 percent, (2) 11 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $100 (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.

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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