Q1) The Draber Company uses allowance method based on aging method to find out estimated allowance for doubtful accounts. Below is given aging at the end of current period with the percent uncollectible experience rates:
| |
|
Number of Days Outstanding |
| |
Total |
0-30 days |
31-60 days |
61-90 days |
91-120 days |
Over 120 days |
| Accounts Receivable |
$450,000 |
$220,000 |
$100,000 |
$45,000 |
$30,000 |
$55,000 |
| %uncollectible rate |
|
2% |
4% |
6% |
8% |
10% |
If $2,000 is determined to be specifically uncollectible, what effect will prepare-off of specific receivable have on:
a. accounts receivable?
b. allowance for doubtful accounts?
c. net receivables?
d. bad debt expense?
You may find it helpful to use a journal entry as part of your response.