Compute Bad Debt Expense Based on the Following Information

question 193

Essay

Compute bad debt expense based on the following information:
(a) RLF Company estimates that 10% of accounts receivable will become uncollectible. Accounts receivable are $100,000, at the end of the year, and the allowance for doubtful accounts has a $600 credit balance.
(b) RLF Company estimates that 10% of accounts receivable will become uncollectible. Accounts receivable are $100,000 at the end of the year, and the allowance for doubtful accounts has a $500 debit balance.

---

Definitions:

Equity Income

Income earned by an investor from an investment in the stock of a company, typically through dividends and the investment's appreciation in value.

Annual Review

A periodic evaluation process, often yearly, used to assess an individual's or organization's performance, financial state, or the status of a certain project.

Acquisition-Date Fair Value

The estimated market value of an asset or liability at the date a transaction is completed or an acquisition is made.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.