Brown Cow Dairy uses the aging approach to estimate Bad

Brown Cow Dairy 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) 1-30 days old,
$12,000; (2) 31-90 days old, $5,000; and (3) more than 90 days old, $3,000. Experience has
shown that for each age group, the average loss rate on the amount of the receivable due to
uncollectability is (1) 5 percent, (2) 10 percent, and (3) 20 percent, respectively. At December
31, 2013 (end of the current year), the Allowance for Doubtful Accounts balance was $800
(credit) before the end-of-period adjusting entry is made.Required:1. Prepare a schedule to
estimate an appropriate year-end balance for the Allowance for Doubtful Accounts.2. What
amount should be recorded as Bad Debt Expense for the current year?3. If the unadjusted
balance in the Allowance for Doubtful Accounts was a $600 debit balance, what would be the
amount of Bad Debt Expense in 2013?View Solution:
Brown Cow Dairy uses the aging approach to estimate Bad
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