US CMA Part 1 · Chapter 1 · Question 20 of 23
Harbor Tech estimates uncollectible accounts using an aging schedule: Current: $300,000 at 1% 31-60 days: $80,000 at 5% Over 60 days: $20,000 at 25% Before adjustment, the allowance for doubtful accounts has a credit balance of $2,500. What is bad debt expense for the period?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $9,500
Explanation
Required ending allowance = $3,000 + $4,000 + $5,000 = $12,000. The aging method is a balance sheet approach, so the expense is the adjustment needed: $12,000 - $2,500 existing credit balance = $9,500.
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