Question - Phillip, Inc. reports the following aging schedule for accounts receivable at December 31, 2015.
Days Outstanding 0 - 30 31 - 60 61 - 90 Over 91
Amount $87,500 $13,500 $9,300 $2,400
Probability of collection 98% 68% 30% 5%
During 2015 gross sales were $250,000. Eighty five percent of gross sales were credit sales. Management estimates that 5% of credit sales will be uncollectible. The current balance in the Allowance for Doubtful Accounts is $10,500 (credit) on December 31, 2015 prior to recording the bad debt expense adjustment. What amount of bad debt expense should Phillip record at the end of 2015 using the Accounts Receivable Aging method?