The following information pertains to Lightning Inc., at the end of December: Credit Sales Accounts Payable Accounts Receivable Allowance for Uncollectible Accounts Cash Sales $60,000 10.000 7.000 $400 credit 20,000 Lightning uses the aging method and estimates it will not collect 2% of accounts receivable not yet due, 10% of receivables less than 30 days past due, and 40% of receivables greater than 30 days past due. The accounts receivable balance of $7,000 consists of $3,500 not yet due, $2,000 less than 30 days past due, and $1,500 greater than 30 days past due. What is the appropriate amount of Bad Debt Expense?

$1,270

Explanation:

The following information pertains to Lightning Inc., at the end of December:  

Credit Sales $60,000

Accounts Payable 10.000

Accounts Receivable 7.000

Allowance for Uncollectible Accounts 400

credit 20,000  

Lightning uses the aging method and estimates it will not collect :

1. 2% of accounts receivable not yet due, $3500

2. 10% of receivables less than 30 days past due, $2000 and  

3. 40% of receivables greater than 30 days past due. $1500

The accounts receivable balance of $7,000 consists of $3,500 not yet due, $2,000 less than 30 days past due, and $1,500 greater than 30 days past due, as stated above

The appropriate amount of Bad Debt Expense?

(0.02*3500)+(0.1*2000)+(0.4*2,500) = 1,270

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