A newly created design business, Teri's Art, is finishing its first year of operations. During the year, credit sales were $40,000 and collections of credit sales were $34,000. One account for $650 was written off. Teri's Art uses the aging−of−receivables method to account for bad debts expense. It has estimated $250 as uncollectible at year−end. What is the amount of the Bad Debts Expense for the first year of operations?

the bad debt expense is $900

Explanation:

The computation of the bad debt expense is shown below:

bad debt expense is

= Written off amount + estimated uncollectible amount at the year end

= $650 + $250

= $900

We simply added the above two items so that the amount of the bad debts for the first year could come

Hence, the bad debt expense is $900

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