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Calculate the desired ending balance of the allowance

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Question - 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.

Required -

A) Calculate the desired ending balance of the allowance for doubtful accounts at the end of the year.

B) What is the bad debt expense for the year?

Reference no: EM132780363

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