Chapter 8, Problem 8.1AP

(a)

To determine

Bad debt expense

Bad debt expense is an expense account. Amount of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables method:

A method of determining the estimated uncollectible receivables, based on the age of individual accounts receivable, is known as aging of receivables method.

To calculate: The total estimated bad debts using the given information.

(b)

To determine

To prepare: The year-end adjusting entry to record the bad debt expense.

(c)

To determine

To prepare: The journal entry to write-off the uncollectible account.

(d)

To determine

To Prepare: The journal entries to record the recovered amount, which is previously written off as uncollectible.

(e)

To determine

To comment: on the answers from (a) to (d) if Company R used 3% of total accounts receivable as uncollectible, instead of using aging of receivables, and discuss the advantages of using aging the accounts receivables instead of applying percentage to total accounts receivable.