Question

At year-end, chief company has a balance of $10,000 in accounts receivable of which $1,000 is more than 30 days overdue. Chief has a credit balance of $100 in the allowance for doubtful accounts before any year-end adjustments. Using the aging of accounts receivable method, chief estimates that 1% of current accounts and 10% of accounts over thirty days are uncollectible. What is the amount of bad debt expense? $100. $90. $190. $290.

Answer 1

"The bad debt will be $290 if you check on the condition,

$9,000 * .01 = $90

1,000 * .10 = $100

The balance sheet of the bad debts will be considered by the amount received in the collection. This will show you the received percentage that will give you the approximate debt.

"