Pharma Corp.
The data presented below for Pharma Corp.is for the year ended December 31, 2015:
-See the data for Pharma Corp.
If Pharma Corp.uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2015?

Question

Pharma Corp.
The data presented below for Pharma Corp.is for the year ended December 31, 2015: 
-See the data for Pharma Corp.
If Pharma Corp.uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2015?

Quizplus · Accepted Answer

The aging of accounts receivable approach estimates bad debt expense based on the age of the accounts receivable. The data shows that Pharma Corp. has $12,700 of accounts receivable that are over 90 days old. According to the aging schedule, 5% of accounts receivable over 90 days old are estimated to be uncollectible. Therefore, Pharma Corp. will report $12,700 * 5% = $12,700 as bad debt expense for 2015.

Pharma Corp. The Data Presented Below for Pharma Corp.is for the Year