At year-end, Chief Company has a balance of $12,000 in accounts receivable of which $1,200 is more than 30 days overdue. Chief has a credit balance of $120 in the allowance for doubtful accounts before any year-end adjustments. Using the aging of accounts receivable method, Chief estimates that 1.5% of current accounts and 12% of accounts over thirty days are uncollectible. What is the amount of bad debt expense?

Multiple Choice

• $186.

• $120.

• $426.

• $306.