On December 31, 2012, Andy Inc. has a debit balance of $1,500 for the Allowance for Uncollectible Accounts before any year-end adjustment. Andy Inc. also has the following information for its accounts receivable and the estimated percentages of bad debts for different past-due amounts: $$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Age Group } \
\text { (days past due) }
\end{array} & \begin{array} { c }
\text { Accounts } \
\text { Receivable }
\end{array} & \begin{array} { c }
\text { Estimated Percent } \
\text { Uncollectible }
\end{array} \
\hline 0 - 30 & \$ 50,000 & 5 \% \
\hline 31 - 60 & \$ 20,000 & 10 \% \
\hline 61 - 90 & \$ 10,000 & 20 \% \
\hline
\end{array}$$ What is the amount of bad debt expense to be reported on Andy Inc.'s financial statements for 2012?

Question

On December 31, 2012, Andy Inc. has a debit balance of $1,500 for the Allowance for Uncollectible Accounts before any year-end adjustment. Andy Inc. also has the following information for its accounts receivable and the estimated percentages of bad debts for different past-due amounts: $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Age Group } \
\text { (days past due) }
\end{array} & \begin{array} { c } 
\text { Accounts } \
\text { Receivable }
\end{array} & \begin{array} { c } 
\text { Estimated Percent } \
\text { Uncollectible }
\end{array} \
\hline 0 - 30 & \$ 50,000 & 5 \% \
\hline 31 - 60 & \$ 20,000 & 10 \% \
\hline 61 - 90 & \$ 10,000 & 20 \% \
\hline
\end{array}$$ What is the amount of bad debt expense to be reported on Andy Inc.'s financial statements for 2012?

Quizplus · Accepted Answer

The total estimated uncollectible amount is calculated as follows: (5% of $50,000) + (10% of $20,000) + (20% of $10,000) = $2,500 + $2,000 + $2,000 = $6,500. Since there is already a $1,500 debit balance in the Allowance for Uncollectible Accounts, the bad debt expense needed to adjust the allowance to the estimated uncollectible amount is $6,500 + $1,500 = $8,000.

On December 31, 2012, Andy Inc What Is the Amount of Bad Debt Expense to Be