At January 1, 2002, Betty DeRose, Inc. had an allowance for bad debts with a $2,

Question

 At January 1, 2002, Betty DeRose, Inc. had an allowance for bad debts with a $2,700 credit balance.
During 2002, Betty wrote-off accounts receivable as uncollectible in the amount of $850. The aging
schedule below was prepared by Betty DeRose, Inc. at December 31, 2002:
Accounts Receivable      % Uncollectible

not past due            $180,000                   2%
1-30 days past due        40,000                   5%
31-60 days past due       20,000                   8%
61-90 days past due       10,000                  20%
over 90 days past due      8,000                  40%

Based on the above information, calculate the amount of bad debt expense recorded by Betty DeRose
for 2002. Do not use decimals in your answer.

Explanation / Answer

Not pastdue                  $180,000  x    2%               =         $3,600 1-30 days past due       $40,000    x   5%                 =         $2,000 31-60 days past due      $20,000   x   8%                 =         $1,600 61-90 days past due      $10,000   x   20%               =         $2,000 over 90 days pastdue     $8,000    x   40%              =         $3,200                                                                                          -----------                                        Total                                           $12,400 Less : Allowance for bad debts  ($2,700 +$850)                $ 3,550                                                                                          ------------             Baddebt expense for2002                                    $8,850                                                                                        ========

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