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Blain Company has $10,000 of accounts receivable that are current, $5,000 that are between 0 and 30 days past due, $3,000 that are between 30 and 60 days past due, and $800 that are more than 60 days past due. Bain estimates that 2% of the receivables that are current will be uncollectible, 5% of those between 0 and 30 days past due will be uncollectible, 10% of those between 30 and 60 days past due will be uncollectible, and 50% of those more than 60 days past due will be uncollectible. Just prior to recognizing uncollectible accounts expense, Blain's allowance for doubtful accounts account has a $100 positive balance. Assuming Blain uses the aging method to estimate uncollectible accounts expense, the amount of uncollectible expense will be ________

a. $1,300.
b. $1150
c. $900.
d. $1050.

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Answer:

d. $1050.

Step-by-step explanation:

We multiply each account balance by the expected uncollectible amount and then addd them to get the expected total for doutful accounts


\left[\begin{array}{cccc}Date&Amount&Expected&uncollectible\\$not due&10000&0.02&200\\$up to 30&5000&0.05&250\\$up to 60&3000&0.1&300\\$more than 61&800&0.5&400\\&&Total&1150\\\end{array}\right]

Balance of the allowance account: 100

The expense will be the adjustment made on the allowance to get the expected balance of 1,150

1,150 - 100 = 1,050

we increase the allowance bu 1,050 to get our expected uncollectible fro maccounts receivable agaisnt the bad debt expense ofthe period.

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