at the end of the current year (before adjusting entries), autumn corporation had a balance of $76,000 in…

at the end of the current year (before adjusting entries), autumn corporation had a balance of $76,000 in accounts receivable and a credit balance of $11,000 in allowance for bad debts. service revenue (all on credit) for the year totaled $490,000. read the requirements. requirement 1. using the percent - of - sales method, calculate the amount of bad debt expense if autumn corporation estimates its bad debt expense using a rate of 2% of credit sales. what is the ending balance of the allowance for bad debts under this scenario? bad debt expense using the percent - of - sales method = $ 9,800 ending balance of allowance for bad debts = $ 20,800 requirement 2. now assume that autumn corporation uses the aging - of - receivables method. autumn corporation estimates that its allowance for bad debts should have a credit balance of $21,000. calculate the amount of its bad debt expense. what is the ending balance of the allowance for bad debts under this scenario? bad debt expense using the aging - of - receivables method = ending balance of allowance for bad debts =

at the end of the current year (before adjusting entries), autumn corporation had a balance of $76,000 in accounts receivable and a credit balance of $11,000 in allowance for bad debts. service revenue (all on credit) for the year totaled $490,000. read the requirements. requirement 1. using the percent - of - sales method, calculate the amount of bad debt expense if autumn corporation estimates its bad debt expense using a rate of 2% of credit sales. what is the ending balance of the allowance for bad debts under this scenario? bad debt expense using the percent - of - sales method = $ 9,800 ending balance of allowance for bad debts = $ 20,800 requirement 2. now assume that autumn corporation uses the aging - of - receivables method. autumn corporation estimates that its allowance for bad debts should have a credit balance of $21,000. calculate the amount of its bad debt expense. what is the ending balance of the allowance for bad debts under this scenario? bad debt expense using the aging - of - receivables method = ending balance of allowance for bad debts =

Answer

Explanation:

Step1: Calculate Bad Debt Expense

Under the aging - of - receivables method, Bad Debt Expense is calculated as the required ending balance of Allowance for Bad Debts minus the unadjusted credit balance of Allowance for Bad Debts. The unadjusted credit balance of Allowance for Bad Debts is $11,000 and the required ending balance is $21,000. Bad Debt Expense=$21,000 - $11,000

Step2: Determine Ending Balance of Allowance for Bad Debts

The ending balance of Allowance for Bad Debts is the required balance as per the aging - of - receivables estimate.

Answer:

Bad Debt expense using the aging - of - receivables method = $10,000 Ending balance of Allowance for Bad Debts = $21,000