At year-end, chief company has a balance of $10,000 in accounts receivable, of which $9,000 is within 30 days and $1,000 is over 30 days. using the aging of accounts receivable method, chief estimates that 1% of accounts within 30 days and 10% of accounts over thirty days are uncollectible. chief has a credit balance of $100 in the allowance for doubtful accounts before any year-end adjustments. what is the amount of bad debt expense?

What is the amount of bad debt expense?

Bad debt expense$ 90

Explanation:

The initial account balance was

Initial Balance  

Accounts Receivable$ 10,000  

Allowance for Uncollectible Accounts  $ 100

The aging of accounts receivable method indicates that the Allowance for Uncollectible Accountsmust have a $190 balance.

Acc. Rec  Allow.  

$ 9,000  $ 901%1-30 days

$ 1,000    $ 10010%more than 30 days

$ 10,000  $ 190  

The journal entry adjustment add up to the balance of Allowance for Uncollectible Accounts to complete the $190 indicated by the aging of accounts receivable method.

Bad debt expense$ 90  

Allowance for Uncollectible Accounts  $ 90

So the final balance of accounts are:

Final Balance  

Accounts Receivable$ 10,000  

Allowance for Uncollectible Accounts  $ 190

You can tell by just looking at it

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