Benson Company estimates its uncollectible accounts by aging its accounts receiv

Question

Benson Company estimates its uncollectible accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. Benson computes a total of $1,800 in estimated uncollectible accounts as of December 31, 2013. Its Accounts Receivable account has a balance of $56,400 and its Allowance for Doubtful Accounts has a credit balance of $300 before adjustment at December 31, 2013.

How much bad debts expense will Benson Company report in 2013?

Select one:

A. $1,500

B. $1,920

C. $1,680

D. $ 240

Explanation / Answer

Estimated allowance for doubtful accounts = 1800

Allowance for doubtful accounts before adjustment = 300

Bad debt expense = 1800-300 = $1500

So answer is a) $1500

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