Reference no: EM13598918

Brown cow dairy uses the aging approach to estimate Bad Debt expense. The balance of each account receivables is aged on the basis of three time periods as follows; 1) 1-30 days old, $12,000; 2) 31-90 days old, $5000; and 3) more than 90 days old, $3000. Experience has shown that for each age group, the average loss rate on the amount of the receivable due to uncollectibility is 1) 3%, 2) 15%, and 3) 30%, respectively. At Dec. 31, 2010 the allowance for doubtful debt accounts balance was $800 (credit) before the end-od-period adjusting entry is made. 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 $600 debit balance, what would be the amount of Bad Debt expense in 2010?