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Chapter 2
Accounting for Receivables
AP-13A (
2
3
)
The following chart was prepared by the accountant of Happy Shoes. The percentages are
based on historical performance. Happy Shoes uses the balance sheet approach to estimate
uncollectible receivables.
Required
a) Calculate the company’s bad debt.
Aging Category
Bad Debt % Balance Estimated Bad
Debt
30 days
2%
$76,000
31–60 days
3.5%
45,000
More than 60 days
10%
25,000
Total
$146,000
b) Assume that allowance for doubtful accounts has a debit balance of $1,100. Calculate the
amount of bad debt expense the company will record.
AP-14A (
2
3
)
Whitney Fabricators uses the balance sheet approach to estimate uncollectible receivables.
The following is the aging of receivables on December 31, 2016.
Aging category
Bad Debt % Balance
Under 30 days
2% $175,000
31–60 days
4%
40,000
61–90 days
10%
10,000
More than 90 days
60%
3,000
Total
$228,000
