00:01
Here we are determining the amount of adjusting entry to provide for doubtful accounts under each of the assumptions, and there are four different assumptions being made.
00:10
So let's start with part a, which says the allowance account before adjustment has a debit balance of $27 ,100, bad debt expense is estimated at one half of 1 % of sales.
00:24
So bad debt expense, using the information we're given, we get $32 ,400 ,000 ,000.
00:41
Times one half of 12 % or of 1%.
00:50
So i'm going to convert some of this to decimals, and we get 32 ,400 ,000 times one half as 0 .5 of it as a decimal.
01:04
And 1 % as a decimal, we divide it by 100.
01:07
We get 0 .01.
01:09
You can plug this into your calculator and you will get $162 ,000 for the bad debt expense.
01:15
At one half of 1%.
01:20
Part b, well, part b says the allowance account before adjustment has a debit balance of $27 ,100.
01:32
An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $128 ,000.
01:39
So the estimated doubtful accounts, as per aging, is $128 ,000...