Question
Question 10 Compute bad debt expense based on the following information: RLF Company estimates that 10%...
Question 10 Compute bad debt expense based on the following information: RLF Company estimates that 10% of accounts receivable will become uncollectible. Accounts receivable are $100,000, at the end of the year, and the allowance for doubtful accounts has a $600 credit balance. Bad debt expenset RLF Company estimates that 10% of accounts receivable will become uncollectible. Accounts receivable are $100,000 at the end of the year, and the allowance for doubtful accounts has a $500 debit balance. Bad debt expenset
Answers
1.
Computation bad debt expense is:
Bad debt expense = Balance of uncollectible account - Credit balance of allowance for doubtful account
= $10,000 - $600
= $9,400
Hence, the expense of bad debt is $9,400.
Working Note:
Computation the balance of uncollectible account is:
Balance of uncollectible account = Accounts receivable * Percentage of uncollectible account
= $100,000 * 0.10
= $10,000
Hence, the balance of uncollectible account is $10,000.
2.
Computation of bad debt expense is:
Bad debt expense = Balance of uncollectible account + Debit balance of allowance for doubtful account
= $10,000 + $500
= 10,500
Hence, the expense of bad debt is $10,500.
Working Note:
Computation the balance of uncollectible account is:
Balance of uncollectible account = Accounts receivable * Percentage of uncollectible account
= $100,000 * 0.10
= $10,000
Hence, the balance of uncollectible account is $10,000.
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