Hello,

I nee a help with the following question. I did my own calculations that I posted below, but I am not sure if it is correct. Please, check my answer and if it is wrong, show me how to calculate it correctly. Thank you!

Mohan Company estimates its uncollectible accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. Mohan computes a total of $2,100 in estimated uncollectible accounts as of its current year-end. Its accounts receivable has a balance of $86,000, and its allowance for uncollectible accounts has an unused balance of $700 before any year-end adjustments.

Questions:

a).What amount of bad debts expense will Mohan report in its income statement for the current year?

b). Determine the amount of accounts receivable reported in current assets at year-end?

My answer:

a). $700-$2,100= -$1,400 (bad debt)

b). Accounts receivable (gross amount owed).$83,600 calculated as ($86,000 - $2,100)

Less: Allowance for uncollectible accounts..$(1,400) calculated as ($700-$2,100)

Accounts receivable, net$82,500.