The Following Information Pertains to Lightning,Inc

question 138

Multiple Choice

The following information pertains to Lightning,Inc.at the end of December:
Lightning uses the aging method and estimates it will not collect 2% of accounts receivable not yet due,10% of receivables less than 30 days past due,and 40% of receivables greater than 30 days past due.The accounts receivable balance of $7,000 consists of $3,500 not yet due,$2,000 less than 30 days past due,and $1,500 greater than 30 days past due.What is the appropriate amount of Bad Debt Expense?

• A)$400.
• B)$470.
• C)$870.
• D)$1,270.

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, intended to standardize practices and streamline interstate commerce.

Unilateral Contract

A contract where only one party promises a reward in exchange for the performance of a specific act by the other party.

Contract Formality

Contract formality refers to the requisite legal formalities and procedures, such as written documentation or specific terms, necessary for a contract to be considered valid and enforceable.

Quasi Contract

A legal concept where courts impose a contract-like obligation on a party to prevent unjust enrichment, even though no real contract exists between the parties involved.