Question

Age Group Amount Estimated Percent Uncollectible Estimated Allowance 0–30 days $ 420,000 2 % $ 8,400 31–60 days 140,000 5 % 7,000 61–120 days 100,000 10 % 10,000 Over 120 days 120,000 20 % 24,000 Allowance for uncollectible accounts $ 49,400 The company has a pre-adjustment credit balance of $5,000 in its Allowance for Uncollectible Accounts at December 31, Year 2. Using the balance sheet approach, what amount of Bad Debt Expense should Glenview report for Year 2?

Answer 1

Answer:

Bad debts expenses for the year                                                           $ 44,400                          

Explanation:

Computation of Bad debts expenses for the year

Estimated uncollectible accounts based on ageing of receivable       $ 49,400

Pre adjustment credit balance-allowance for uncollectible account    $   5,000

Bad debts expenses for the year                                                           $ 44,400