AGING METHOD BAD DEBT EXPENSE
Cindy Bagnal, the manager of Cayce Printing Service, has provided you with the follow- ing aging schedule for Cayce's accounts receivable:
Accounts
Receivable Category Amount
Proportion Expected to Default
|
0-20 days
|
$ 88,200
|
0.02
|
|
21-40 days
|
21,500
|
0.08
|
|
41-60 days
|
11,700
|
0.15
|
|
Over 60 days
|
5,300
|
0.30
|
|
|
$126,700
|
|
Cindy indicates that the $126,700 of accounts receivable identified in the table does not include $8,900 of receivables that should be written off.
Required:
1. Journalize the $8,900 write-off.
2. Determine the desired postadjustment balance in allowance for doubtful accounts.
3. If the balance in allowance for doubtful accounts before the $8,900 write-off was a debit of $450, compute bad debt expense.