Question 2 (5 marks)

MH Corp. (MHC) estimates its allowance for doubtful accounts using the balance sheet approach. The following information is available for MHC's year ended December 31, 2019:

Allowance for doubtful accounts

Allowance for doubtful accounts, December 31, 2018 (credit)

$157,500

Accounts written off during 2019

175,000

Account recoveries during 2019

3,500

Accounts receivable

0-30 days (98% expected recovery)

$ 653,000

31-60 days (85% expected recovery)

340,000

61-90 days (60% expected recovery)

145,000

91+ days (30% expected recovery)

67,000

Accounts receivable balance, December 31, 2019

$1,205,000

Required: Calculate MHC's bad debt expense for the year ended December 31, 2019. (5 marks)