Zen desk incorporated uses the aging approach to estimate bad debt expense. The balance of account receivable on Dec 31st 2017, was $72,000 and is aged on the basis of three-time periods as follows: (1) not yet due, $48,000, (2) up to 120 days past due, $16,500, and (3) more than 120 days past due, $7,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 2 percent, (2) 14 percent, and (3) 35 percent, respectively. The opening balance of Allowance for Doubtful Accounts balance is $2,700 (credit) on Jan 1st 2017. What is the journal entry for recording bad debt expense for the year 2017.
Zen desk incorporated uses the aging approach to estimate bad debt expense. The balance of account receivable on Dec 31st 2017, was $72,000 and is aged on the basis of three-time periods as follows: (1) not yet due, $48,000, (2) up to 120 days past due, $16,500, and (3) more than 120 days past due, $7,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 2 percent, (2) 14 percent, and (3) 35 percent, respectively. The opening balance of Allowance for Doubtful Accounts balance is $2,700 (credit) on Jan 1st 2017. What is the journal entry for recording bad debt expense for the year 2017.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:Zen desk incorporated uses the aging approach to estimate bad debt expense. The balance of
account receivable on Dec 31st 2017, was $72,000 and is aged on the basis of three-time periods
as follows: (1) not yet due, $48,000, (2) up to 120 days past due, $16,500, and (3) more than 120
days past due, $7,500. Experience has shown that for each age group, the average loss rate on the
amount of the receivables at year-end due to uncollectability is (1) 2 percent, (2) 14 percent, and
(3) 35 percent, respectively. The opening balance of Allowance for Doubtful Accounts balance is
$2,700 (credit) on Jan 1st 2017.
What is the journal entry for recording bad debt expense for the year 2017.
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