Table 9-5

The Ritchie Company gathered the following information pertaining to its year ended December 31, 2017, prior to any adjustments:

Net credit sales for the year $780,000 Accounts receivable, Dec. 31, 2017 170,000 Allowance for doubtful accounts, December 31, 2017 3,200 Cr.

Aging of accounts receivable at December 31, 2017: 1-30 days $95,000 31-60 days 38,000 61-90 days 23,000 Over 90 days 14,000 Total $170,000

Refer to Table 9-5. Assume Ritchie uses the aging-of-accounts-receivable method for estimating uncollectible accounts. Ritchie estimates that bad-debt expense will be aged as follows: 2.5% for 1-30 days; 4.5% for 31-60 days; 7.5% for 61-90 days; and 22.5% for over 90 days. After the adjustment for uncollectible accounts is made, the net realizable value of the accounts receivable will be: Question 4 options:

$157,840.

$161,040.

$170,000.

$164,240.

Question 5 The current credit balance in allowance for doubtful accounts is $150. Management estimates that 2.5% of net credit sales of $105,000 will be uncollectible. Based on the foregoing data, what is the bad-debt expense balance on the income statement? Question 5 options:

$2,775

$2,475

$2,650

$2,625