Concept explainers
Recording and Reporting a
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: (I ) not yet due, $50,000; (2) up to 180 days past due. $14,000; and (3) more than 180 days past due, $4,000. 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) 3 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 $200 (credit) before the end-of-period
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 .
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