Question - Walt's Hot Peppers began 2008 with debit balance in Accounts Receivable of $20,000 and credit balance in Allowance for Doubtful Accounts of $1,500. During the year, Walt's Hot Peppers sold $400,000 of product and collected $340,000 from customers. In addition, Walt's wrote off $1,000 of Accounts Receivable as uncollectible.
Management uses the allowance method to account for bad debts and believes that ultimately that 8% of the year -end balance in Accounts Receivable will not be collected.
How much Bad Debt Expense will be recorded in 2008?