Question

Item2 1 points Time Remaining 59 minutes 39 seconds00:59:39 Item 2 Time Remaining 59 minutes 39 seconds00:59:39 Crimson Inc. recorded credit sales of $755,000, of which $500,000 is not yet due, $180,000 is past due for up to 180 days, and $75,000 is past due for more than 180 days. Under the aging of receivables method, Crimson Inc. expects it will not collect 5% of the amount not yet due, 19% of the amount past due for up to 180 days, and 28% of the amount past due for more than 180 days. The allowance account had a debit balance of $2,800 before adjustment. After adjusting for bad debt expense, what is the ending balance of the allowance account

Answer 1

$83,000

Step-by-step explanation:

The computation of the ending balance of the allowance account is given below:

Given that

Accounts receivable not yet due be $500,000

So, the bad debt for the same should be

= 5% of $500,000

= $25,000

Accounts receivable due for upto 180 days be $180,000

So, the bad debts for the same should be

= 19% of $180,000

= $34,200

Accounts recievable due for more than 180 days be $75,000

So, the bad debts for the same should be

= 28% of $75,000

= $21,000

Now

Ending balance of Allowance aoount is

= $2,800 + $25,000 + $34,200 + $21,000

= $83,000