Adventure Company Uses the Aging of Accounts Receivable Method to Estimate

question 45

Essay

Adventure Company uses the aging of accounts receivable method to estimate bad debt expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2)
30-90 days old, and (3) more than 90 days old. Experience has shown that for each age group, the average loss rate on the amount of the receivable due to uncollectibility is (1) 1%, (2) 15%, and (3) 40%, respectively. At December 31, 2011, the unadjusted balance in the Allowance for Doubtful Accounts was $100 (credit), and the total amounts receivable in each category were: (1) 1-30 days old, $65,000, (2) 30-90 days old, $10,000, and (3) more than 90 days old, $4,000. Calculate the balance that should be reported in the Allowance for Doubtful Accounts at December 31, 2011, and prepare the appropriate bad debt expense adjusting entry at December 31,
2011.

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Definitions:

Maniera Greca

Italian, “Greek manner.” The Italo-Byzantine painting style of the 13th century.

Madonna Enthroned

A type of Christian art depicting the Virgin Mary seated on a throne as Queen of Heaven, often with the Christ Child.

Cimabue

An Italian painter and designer from the late 13th century, considered one of the last great Italian artists in the Byzantine style.

Late Gothic

A style of Gothic architecture and art that developed in the late Middle Ages, characterized by elaborate decorations, intricate designs, and the use of flying buttresses.