Melanie Inc. has sales equal to $300,000 for the year. Its Accounts receivable balance is $100,000 and is made up of $50,000 30 days old, $20,000 60 days old, $11,000 90 days old and $19,000 over 120 days old. It has a debit balance of $400 in Allowance for Doubtful Accounts. The rate of uncollectibility is as follows: 1% in the 1-30 days category, 3% in the 31-60 days category, 5% in the 61 to 90 days category and 25% over 120 days.
What is the balance in Bad Debts Expense for the year?
• $6,200
$6,400
• $6,800
• $6,000