Question

# At January 1, 2025, THE Company had an allowance for bad debts with a \$14,100 credit...

```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:```

\$40,410

\$26,310

\$37,510

\$43,310

\$23,410

\$31,100

none of the above choices are correct

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

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