Question

. A year-end review of accounts receivable and estimated uncollectible percentages revealed the following:

      1-30 days     $24,000        2%   

      31-60 days         $800      10%

      61-90 days         $500      20%

Prior to the year-end adjusting entry, the balance in Allowance for Uncollectible Accounts was $300. The bad debt expense for the year was:

1. $300
2. $360
3.   $660
4. $960

Answer 1

The amount of estimated uncollectible is calculated below:

Credit period	$(A)	%(B)	$ A*B
1 - 30 Days	24,000	2%	480
31- 60 days	800	10%	80
61-90 days	500	20%	100
Total			$660

There is not stated about the debit or credit balance of allowance for Uncollectible Accounts. But allowance for Uncollectible Accounts is a contra asset account and generally has a credit balance.

So bad debt expense = Total estimated uncollectible amount - Credit balance of allowance for Uncollectible Accounts

Bad debt expense = $660 - $300

= $360

So correct answer is option(b) or $360