The accounts receivable clerk had prepared the following aging of Northumberland Corp's accounts receivable.The current balance in the allowance for uncollectibles is $9,800 DR.What is the bad debt expense for the year? $\begin{array}{lrc}\text { Age since due }&\text { Amount }&\text { \% uncollectible }\\hline
0-30 \text { days } & \$ 500,000 & 1 \% \
30-60 \text { days } & 200,000 & 4 \% \
\text { over } 60 \text { days } & 100,000 & 10 \% \
\text { Total } & \$ 800,000 & 5 \% \text { (average) }
\end{array}$

Question

Quizplus · Accepted Answer

To calculate the bad debt expense for the year, first, we need to calculate the desired ending balance in the allowance for uncollectible accounts based on the aging schedule provided. Then, we adjust the current balance in the allowance account to reach the desired ending balance. The calculation is as follows:- For 0-30 days: $500,000 * 1% = $5,000- For 30-60 days: $200,000 * 4% = $8,000- For over 60 days: $100,000 * 10% = $10,000- Total desired allowance = $5,000 + $8,000 + $10,000 = $23,000The current balance in the allowance account is a $9,800 debit balance, which is unusual for an allowance account and indicates that the actual uncollectibles were more than anticipated. To adjust this to the desired balance of $23,000, we need to credit the allowance account to both eliminate the debit balance and reach the desired credit balance. Therefore, the adjustment (bad debt expense) is:- From $9,800 debit to $0 = $9,800- From $0 to $23,000 credit = $23,000- Total adjustment = $9,800 + $23,000 = $32,800Thus, the bad debt expense for the year is $32,800.

The Accounts Receivable Clerk Had Prepared the Following Aging of Northumberland