Question

11. On December 31, 2015, Andy Inc. has a debit balance of $1,500 for the Allowance for Uncollectible Accounts before any year-end adjustment. Andy Inc. also has the following information for its accounts receivable and the estimated percentages of bad debts for different past due amounts: 

Age Group 

(days past due) Accounts 

Receivable Estimated Percent 

Uncollectible 

0-30 $50,000 5% 

31-60 $20,000 10% 

61-90 $10,000 20% 

What is the amount of bad debt expense to be reported on Andy Inc's financial statements for 2015? 

• 6000 

• 8000 

• 5000 

• No answer 

12. McConnell's Bakeries had the following balances on December 31, 2015, before any adjustment: Accounts Receivable - $100,000: Allowance for Uncollectible Accounts - $4,100 (credit). McConnell's estimates uncollectible accounts based on an aging of accounts receivable as shown below: 

Age Group	Accounts	Estimated Percent
(days past due)	Receivable	Uncollectible
Not yet due	$50.000	4%
0-30	$20.000	8%
31-60	$18,000	10%
More than 60	$12.000	40%

What amount of bad debt expense did McConnell's record in its December 31, 2015, adjustment to the allowance account? 

• 15300 

• 10200 

• 6100 

• No answer text provided
  

Answer 1

11) Ans: 8000

Explanation:

1) Estimated Bad Debt Expense:

50,000× 5%	2500
20,000 × 10%	2000
10,000 × 20%	2000
Total Estimated bad debt expense	6500

2) Amount that should be reported on financial statement:

= Estimated bad debt exp. + Allowance for uncollectibal ( beginning bala.)

= $6500 + 1500( debit)

= 8000

12) Ans: 6100

Explanation:

1) Estimated Bad debt Expense:

$ 50,000 × 4%	2000
$ 20,000 × 8%	1600
$ 18000 × 10%	1800
$ 12000 ×40%	4800
Total estimated bad debt expense	10200

2) Bad Debt Expense reported on Dec.31,2015:

= Estimated bad debt + Allowance for uncollectible

= 10200 - 4100 ( credit)

= 6100