The company estimates future uncollectible accounts. The company determines $14,000 of accounts receivable on January 31 are past due, and 30% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Record bad debts at the end of January.

Bad debt expense = $4,690

Explanation:

Entry                                                 DEBIT       CREDIT

Bad debt Expense                         $4,690

Allowance for doubtful debt                           $4,690

In Order to record bad debt expense, we need to go through some minor workings.

Workings

Receivables on January 31  past due =  $14,000 x 30% = $4,200

Receivable not past due = ($14,000 x 70%) x5% = $490

Bad debt expense = Receivables on January 31  past due + Receivable not past due

Bad debt expense = $4,200 + $490

Bad debt expense = $4,690

t

explanation:

x

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.