Answer:
Year Sales Written Off Accounts
Year of Origin
Uncollectible 1 2 3
1st $ 900,000 $4,500 $4,500
2nd 1,250,000 9,600 3,000 $6,600
3rd 1,500,000 12,800 1,000 3,700 $8,100
4th 2,200,000 16,550 1,500 4,300 $10,750
Year <u> Bad Debt Expense </u>
Expense Actually Expense Increase Balance of Allowance
Reported Estimated (Decrease) Account Year End
1) $4500 $ 9000 $4500 $ 4500
2) $ 9600 $12500 1900 $ 6400
3) $12800 15000 2200 $ 8600
4) 16550 22000 5450 14,050
Explanation:
The actual write off accounts originating in the years were
1) ( $ 4500+ $ 3000+ $ 1000+ $ 1500)= $ 9500
2) ( $ 6600+ 3700+ 4300) = $ 14600
3) ($ 8100+ $ 10,750)= $ 18,850.
Only the first year written off accounts are close to expense if it would have been calculated to 1% of sales ( 1% of $ 900,000) = $ 9000
