Question - Chiller Company has credit sales of $5.60 million for year 2013. Chiller estimates that l 32% of the credit sales will not be collected. Historically, 4% of outstanding accounts receivable is uncollectible. On December 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $3,561. Chiller prepares a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here:
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December 31, 2013 Accounts Receivable
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Age of Accounts Receivable
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Expected Percent Uncollectible
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$1,095,000
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Not yet due
|
0.85%
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322,500
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1 to 30 days past due
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1.42
|
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84,700
|
31 to 60 days past due
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7.60
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|
50,420
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61 to 90 days past due
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42.50
|
|
12,500
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Over 90 days past due
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81.00
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Assuming the company uses the aging of accounts receivable method, what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?