A study of accounts receivable at A & W Department stores are either current, one month overdue, two months overdue, written off as bad debt or paid in full. Of those that are current, 80% are paid that month and the rest become one month overdue. Of the one month overdue bills, 90% are paid and the rest become two months overdue. 85% of those that are two months overdue will get paid or be considered as bad debt.
If the sales are $150,000 per month, determine how much the company can expect to receive of this amount. How much will become bad debt?