67
Chapter 2
Accounting for Receivables
Aging Category
Bad Debt % Balance
Estimated Bad
Debt
30 days
2%
$25,000
31–60 days
3%
10,000
More than 60 days
4%
2,000
Total
$37,000
Date
Account Title and Explanation
Debit
Credit
AP-12B (
2
3
)
Nortelle Canada operates in an industry that has a high rate of bad debt. Before the year-end
adjustments, Nortelle Canada’s accounts receivable has a debit balance of $536,000 and the
allowance for doubtful accounts had a credit balance of $20,000. The December 31, 2016 year-
end balance reported on the balance sheet for the allowance for doubtful accounts is based
on the aging schedule shown below.
Aging Category
Bad Debt %
Balance
Less than 16 days
2%
$300,000
16–30 days
3%
100,000
31–45 days
5%
75,000
46–60 days
10%
32,000
61–75 days
20%
18,000
More than 75 days
40%
11,000
Required
a) What is the balance for the allowance for doubtful accounts at year-end?
Aging Category
Bad Debt %
Balance
Estimated Amount
of Bad Debt
Less than 16 days
2%
$300,000
16–30 days
3%
100,000
31–45 days
5%
75,000
46–60 days
10%
32,000
61–75 days
20%
18,000
More than 75 days
40%
11,000
