Four companies are trying to estimate their bad debt expense using the percentage-of-receivables basis. Assuming each company has a similar total Account Receivables balance and a similar estimated percentage collectible for the number of days past due, which company should record the HIGHEST amount of Bad Debt Expense? The table reports the company's percentage of total Accounts Receivable in each category.
Company 1: Not Due-45%, 1-30 days past due-30%, 31-60 days past due-10%, Over 60 days past due-15%
Company 2: Not Due-25%, 1-30 days past due-25%, 31-60 days past due-25%, Over 60 days past due-25%
Company 3: Not Due-15%, 1-30 days past due-5%, 31-60 days past due-20%, Over 60 days past due-60%
In 2017, Patterson Wholesale Company had net credit sales of $750,000. On January 1, 2017, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2017, $30,000 of uncollectible accounts receivable were written off. Past experience indicates tat the allowance should be 10% of the balacne in receivables (percentage-of-receivables basis). If the accounts receivable balance at December 31 was $200,000, what is the required adjustment to Allowance for Doubtful Accounts at December 31, 2017? $32,000, After the write-offs are recorded. Allowance for Doubtful Accounts will have a debit balance of $12,000 ($18,000 credit beginning balance combined with a $30,000 debit for the write-offs). The desired balance, using the percentage-of-receivable basis, is a credit balance of $20,000 ($200,000X10%). In order to have an endign balance of $20,000, the required adjustment to Allowance for Doubtful Accounts is $32,000.