The answer to this question statement is $13,600.
When a receivable is no longer recoverable as a result of a customer's inability to pay an outstanding debt owing to bankruptcy or other financial issues, a bad debt expense is recorded.
Companies that offer credit to their clients record bad debts as an allowance for doubtful accounts, sometimes referred to as a provision for credit losses, on their balance sheet.
To account for bad debt expense, there are two main techniques. The direct write-off method involves writing off uncollectible accounts to expenditure as soon as they become uncollectible.
The allowance technique, on the other hand, accrues an estimate that is continuously updated.
Statistical modelling, such as default likelihood, can be used to assess the cost of bad debt in order to calculate losses from bad debt.
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