Question

Heller Corporation has aged its accounts receivable and estimated uncollectible accounts as follows (in thousands). Age of Receivables A/R Balance Estimated % uncollectible Current $11,000 1% 30-60 days past due 2,400 3% 61-90 days past due 1,700 6% Over 90 days past due 840 10% What bad debt expense should the company report for the current period

Answer 1

Answer:

$368

Explanation:

Bad debts also known as uncollectible expenses are the portion of the accounts receivable in accrual accounting  that have to be written off as they are eventually not paid by the accounts receivable.

One of the ways of estimating bad debt is allowance method , which is expressing a bad expenses as a percentage of credit sales based on experience and past records.

Days past due     balance   % uncollectible  

Current             11,000                1%                  110

30-60 days        2,400                3%                   72

61-90 days         1,700                 6%                  102

Over 90 days       840                10%                  84

Total                                                                     368

Bad debt expenses to be recognized is $368