At year-end, Chief Company has a balance of $26,000 in accounts receivable of which $2,600 is...

At year-end, Chief Company has a balance of $26,000 in accounts receivable of which $2,600 is more than 30 days overdue. Chief has a credit balance of $270 in the allowance for doubtful accounts before any year-end adjustments. Using the aging of accounts receivable method, Chief estimates that 1.0% of current accounts and 11% of accounts over thirty days are uncollectible. What is the amount of bad debt expense?

$520

$790

$270

$250

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Expert Solution

Correct answer--------------$250

Working

	Accounts receivables	x	Percent Uncollectable (%)	=	Estimated Uncollectable
Current	$ 23,400.00	x	1.00%	=	$ 234.00
More than 30 days due	$ 2,600.00	x	11.00%	=	$ 286.00
Estimated balance of allowance for doubtful accounts					$ 520.00

Estimated balance of allowance for uncollectables	$ 520.00	Cr
Balance in Allowance for uncollectable account (Cr)	$ 270.00	Cr
Total bad debts to be recorded	$ 250.00	Cr

ekkarill92 answered 1 year ago

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