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12 May, 12:57

he following information pertains to Lightning Inc., at the end of December: Credit Sales $ 20,000 Accounts Payable 10,000 Accounts Receivable 10,400 Allowance for Uncollectible Accounts 400 credit Cash Sales 20,000 Lightning uses the aging method and estimates it will not collect 7% of accounts receivable not yet due, 15% of receivables up to 30 days past due, and 49% of receivables greater than 30 days past due. The accounts receivable balance of $10,400 consists of $7,000 not yet due, $1,700 up to 30 days past due, and $1,700 greater than 30 days past due. What is the appropriate amount of Bad Debt Expense?

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  1. 12 May, 16:24
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    What is the appropriate amount of Bad Debt Expense?

    Bad debt expense $ 1,178

    Allowance for Uncollectible Accounts $ 1,178

    Explanation:

    The total amount of Allowance for Uncollectible Accounts is a credit of $0,400

    Initial Balance

    Accounts Receivable $ 10,400

    Allowance for Uncollectible Accounts $ 0,400

    The aging method indicates that the total amount must be:

    Acc. Rec Allow.

    7% $ 7,000 $ 0,490 Not yet due

    15% $ 1,700 $ 0,255 1-30 days

    49% $ 1,700 $ 0,833 more than 30 days

    $ 10,400 $ 1,578

    It's necessary to entry the next journal entry to meet the amount indicated by the aging method.

    Bad debt expense $ 1,178

    Allowance for Uncollectible Accounts $ 1,178
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