Calculate the desired ending balance of the allowance

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Reference no: EM132773830

Sam's Auto Parts uses the aging method to estimate bad debt expense. At the end of 2018, the company had an accounts receivable balance of $102,100 and a credit balance in the allowance for doubtful accounts of $9,180 (before year end adjustments).

The company had the following analysis of accounts receivable at the end of 2018:

Accounts Receivable Age           Amount Proportion                Expected to Default
Current                                       $ 60,000                                       2%
1-15 days past due                            21, 500                               3%                                                                                       16-45 days past due                           3, 700                                7%                                                                                      46-90 days past due                            3, 600                             15%
Over 90 days past due                       13, 300                               25%                                                                                                                                                $ 102,100
Sam's Auto Parts has a December 31 year end.

Problem 1: Calculate the desired ending balance of the allowance for doubtful accounts at the end of the year.

Problem 2: What is the bad debt expense for the year

Reference no: EM132773830

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