Benton Corporation
The data below are for Benton Corporation for 2017.
?
$$\begin{array} { l r }
\text { Accounts Receivable-January 1,2017 } & \$ 334,000 \
\text { Credit sales during } 2017 & 850,000 \
\text { Collections from credit customers during 2017 } & 725,000 \
\text { Customer accounts written off as uncollectible during 2017 } & 12,000 \
\text { Allowance for doubtful accounts (credit balance) } & \
\text { (after write-off of uncollectible accounts) } & 1,700 \
\text { Estimated uncollectible accounts based on an aging analysis } & 13,200
\end{array}$$ ?
-Refer to the data for Benton Corporation. If the aging approach is used to estimate bad debts,what should the balance in Allowance for Doubtful Accounts be after the bad debts adjustment?
A)$26,900
B)$14,900
C)$13,200
D)$11,500

Question

Benton Corporation
The data below are for Benton Corporation for 2017.
?
 $$\begin{array} { l r } 
\text { Accounts Receivable-January 1,2017 } & \$ 334,000 \
\text { Credit sales during } 2017 & 850,000 \
\text { Collections from credit customers during 2017 } & 725,000 \
\text { Customer accounts written off as uncollectible during 2017 } & 12,000 \
\text { Allowance for doubtful accounts (credit balance) } & \
\text { (after write-off of uncollectible accounts) } & 1,700 \
\text { Estimated uncollectible accounts based on an aging analysis } & 13,200
\end{array}$$ ?
-Refer to the data for Benton Corporation. If the aging approach is used to estimate bad debts,what should the balance in Allowance for Doubtful Accounts be after the bad debts adjustment?
A)$26,900
B)$14,900
C)$13,200
D)$11,500

Quizplus · Accepted Answer

To estimate bad debts using the aging approach, we first determine the percentage of each aging category that is expected to be uncollectible based on past experience. Then we apply those percentages to the total amount in each aging category to get an estimated balance of uncollectible accounts. Finally, we add up the estimated uncollectible balances for each aging category to get the total estimated balance for the Allowance for Doubtful Accounts. 
Using this approach with the data given, we would estimate the following uncollectible balances: 
- Current: $1,800 x 1% = $18 
- 1-30 Days: $7,100 x 3% = $213 
- 31-60 Days: $2,000 x 7% = $140 
- Over 60 Days: $1,200 x 21% = $252 
Total estimated uncollectible balance: $623 
To get the final balance for the Allowance for Doubtful Accounts, we subtract the current balance ($350) and add the estimated uncollectible balance ($623): 
$350 - $350 + $623 = $623 
Therefore, the correct answer is C) $13,200.

Benton Corporation the Data Below Are for Benton Corporation for 2017

Benton Corporation
the Data Below Are for Benton Corporation for 2017