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Question 10 Compute bad debt expense based on the following information: RLF Company estimates that 10%...

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 receivabl

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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