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Question
Temper Company has credit sales of $3.10 million for year 2013. Accounts Receivable total $947,360 and the company estimates that 2% of accounts receivable will remain uncollectible. Historically, .9% of sales have been uncollectible. On December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted debit balance of $2,575. Temper prepared a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here:
| December 31, 2013 Accounts Receivable | Age of Accounts Receivable |
Expected Percent Uncollectible | |
| $620,000 | Not yet due | 05 | % |
| 248,000 | 1 to 30 days past due | 1.80 | |
| 49,600 | 31 to 60 days past due | 6.30 | |
| 24,800 | 61 to 90 days past due | 31.75 | |
| 4,960 | Over 90 days past due | 66.00 | |
Assuming the company uses the percent of accounts receivable method, what is the amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting journal entry?
A. $18,947.20
B. $16,372.20
C. $23,024.40
D. $27,900.00
E. $21,522.20
Answer
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