Choice "B" is correct. If bad debts are based on accounts receivable, the result of the aging will be the balance in the allowance account.
| |
|---|
| $60,000 x 5% | $ 3,000 |
| $4,000 x 10% | 400 |
| Over 60 days | 1,400 |
| Total | $ 4,800 |
Note: The bad debt expense for the year would be $3,800 ($4,800 - $1,000).Choice "d" is incorrect. If bad debts are based on accounts receivable, the results of the aging will be the balance in the allowance for uncollectibles account.
Choice "a" is incorrect. $3,800 is the bad debt expense for the year. If accounts receivable is the basis for bad debts, the aging results is the balance in the allowance for uncollectibles account.
Choice "c" is incorrect. If bad debts are based on accounts receivable, the results of the aging will be the balance in the allowance for uncollectible account.
