Question
The Company extends credit to customers in the normal course of business and performs ongoing credit evaluations of customers, maintaining allowances for potential credit losses
The Company extends credit to customers in the normal course of business and performs ongoing credit evaluations of customers, maintaining allowances for potential credit losses which, when realized, have been within management's expectations. Invoices are aged based on terms with the customer. The company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance ranges from 1-10% of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible. The allowance for doubtful accounts is based on historical information and recorded as a charge to operating expense. At December 31, 2018 and 2017, the company's allowance for doubtful accounts was $7.315 and $6,239 respectively. The bad debt write-offs for they years ended December 31, 2018 and 2017 were $1,162 and $503, respectively.
Use the information in the disclosure note to solve for the amount of bad debt expense included in the company's 2018 Income Statement. Show your calculation for solving for bad debt expense.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started