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Below are two independent problems related to bad debt estimates. 1. An unadjusted trial...

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Accounting

Below are two independent problems related to bad debt estimates.
1. An unadjusted trial balance for Highperformance Co. shows the following balances at December 31:
Accounts Receivable
Allowance for Doubtful Accounts
Instruction: For each of the cases below, calculate: a. the amount of "bad debt expense", b. the ending balance for the "Allowance for Doubtful Accounts", and c. the ending net realizable value for the "Accounts receivable".
Case 1: Assume that the company estimates its bad debts based on percentage of accounts receivable method. Company experience indicates that \(4\%\) of receivable will be uncollectible.
Answer: a:
b :
c :
Case 2: Assume that the allowance for bad debts has a debit balance of \(\$ 400\) instead. Other things being equal.
Answer: a:
\(\mathrm{b}: \)
\(\mathrm{c}: \)
2. An aging schedule is developed as follows.
Days Account outstanding
Less than 16 days
\(16-30\) days
\(31-45\) days
\(45-60\) days
Assume that the allowance for bad debts had a credit balance of \(\$ 40,000\) before adjustment. Calculate: \( a \). the ending "allowance for bad debts" balance; and b. the "bad debt expense".
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