Question

At January 1, 2025, THE Company had an allowance for
bad debts with a $14,100 credit balance. During 2025,
THE Company wrote-off $17,000 of accounts receivable
as being uncollectible. At December 31, 2025, THE
Company prepared the following aging schedule:

                   Accounts Receivable   % Uncollectible
not past due            $125,000               2%
1-30 days past due        88,000               7%
31-60 days past due       53,000              15%
61-90 days past due       61,000              20%
over 90 days past due     29,000              40%

The bad debt expense reported by THE Company for 2025
was equal to:

Group of answer choices

$40,410

$26,310

$37,510

$43,310

$23,410

$31,100

none of the above choices are correct

Answer 1

Balance in allowance for doubtful accounts after write off = $14,100 credit balance - $17,000

= $2,900 debit balance.

Year end balance in allowance for doubtful accounts = ($125,000 * 2%) + (88,000 * 7%) + ($53,000 * 15%) + ($61,000 * 20%) + ($29,000 * 40%)

= $2,500 + $6,160 + $7,950 + $12,200 + $11,600

= $40,410

Bad debt expense = Year end balance in allowance for doubtful accounts + Debit balance in allowance for doubtful accounts

= $40,410 + $2,900

= $43,310