ABC Corporation recently completed its fiscal year-end on December 31, 2022. The company uses the allowance method
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Question:
ABC Corporation recently completed its fiscal year-end on December 31, 2022. The company uses the allowance method for accounting for bad debts. The accounts receivable balance as of December 31, 2022, was $500,000. The aging analysis of accounts receivable indicates the following:
- 60% of accounts receivable are less than 60 days old and are expected to be fully collected
- 30% of accounts receivable are between 60 and 90 days old and are expected to be collected, but a provision of 3% is needed for possible bad debts
- 10% of accounts receivable are over 90 days old and are considered uncollectible, and a provision of 30% is needed for bad debts.
Calculate the amount of bad debt expense that ABC Corporation should record for the year ended December 31, 2022.
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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