# Casilda Company uses the aging approach to estimate bad debt expense.pdf

26 de Mar de 2023
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### Casilda Company uses the aging approach to estimate bad debt expense.pdf

• 1. Casilda Company uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, \$51,500, (2) up to 180 days past due, \$14,200, and (3) more than 180 days past due, \$4,100. 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) 11 percent, and (3) 31 percent, respectively. At December 31, 2013 (end of the current year), the Allowance for Doubtful Accounts balance is \$500 (credit) before the end-of-period adjusting entry is made.what is bad debt expense?what is the allowance for dobtful accounts? Solution The average loss calculated in all three cases are; In case more than 180 days past due, \$1271 will be consider as bad debts. Thus \$1271is bad debts. Total amount in all three cases is \$3863. Thus amount of Allowance for doubtful allowance will be calculated as follows; Amount of Bad Debts......................................................\$1271 Add: Allowance for doubtful debts...............................\$3863 Less: Existing Allowance for doubtful debts..............\$500 Thus Now amount of Allowance for doubtful debts will be (1271 +3863 - 500) = \$4663.