Determine the amount of bad debt expense

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Reference no: EM13511401

The trial balance of Sparkling Jewelry Company at the end of its 2012 fiscal year included the following account balances:
Account
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $66,400
Allowance for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300 (debit balance)

The company has not yet recorded any bad debt expense for 2012.

Determine the amount of bad debt expense to be recognized by Sparkling Jewelry Company for 2012, assuming the following independent situations:

1. An aging accounts receivable analysis indicates that probable uncollectible accounts receivable at year-end amount to $3,900.

2. Company policy is to maintain a provision for uncollectible accounts receivable equal to 4% of outstanding accounts receivable.

3. Company policy is to estimate uncollectible accounts receivable as equal to 1% of the previous year's annual sales, which were $350,000.

Reference no: EM13511401

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