. Estimate the balance of the Allowance for Doubtful Accounts using percent of sales method. Assume a $0 existing balance in Allowance for Doubtful Accounts. Hint: Identify the percent of uncollectible for credit sales. 2. Estimate the balance of the Allowance for Doubtful Accounts using percent of receivables method. Assume a $0 existing balance in Allowance for Doubtful Accounts. Hint: Identify the percent of uncollectible for accounts receivable.

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Tundexi Tundexi · Answer 1 · 2021-01-03T01:50:58+01:00

Answer:

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1. Bad debt expense under percentage of sales method = Credit sales * Percentage of doubtful account

= $7,150,000 * 1%

= $71,500

2. Balance in Allowance for doubtful account under percentage of receivables method = Accounts receivable balance at end * % of doubtful account

= $1,220,000 * 5%

= $61,000

3. Age Amount % of Un-collectible Estimated Balance of

account uncollectible account

Not due yet 830000 2% 16600

1-30 254000 3% 7620

31-60 86000 7% 6020

61-90 38000 33% 12540

over 90 day 12000 68% 8160

Total $50,940

The estimated balance in allowance for doubtful account at end = $50,940