Reference no: EM13604519

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, $11,500; (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 uncollectibility is (1) 4 percent, (2) 10 percent, and (3) 27 percent, respectively. At December 31, 2010 (end of the current year), the Allowance for Doubtful Accounts balance was $360 (credit) before the end-of-period adjusting entry is made.

Requirement 1:

Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. (Round all final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Aged accounts receivable	Estimated amount uncollectible
1-30 days		$
31-90 days
More than 90 days
Estimated balance in Allowance for Doubtful Accounts		$

Requirement 2:

What amount should be recorded as Bad Debt Expense for the current year? (Omit the "$" sign in your response.)

Amount of bad debt expense

$

Requirement 3:

If the unadjusted balance in the Allowance for Doubtful Accounts was a $833 debit balance, what would be the amount of Bad Debt Expense in 2010? (Omit the "$" sign in your response.)

Amount of bad debt expense

$