Question

Information on Ivanhoe Company for 2021 follows:

Total credit sales		$970,000
Accounts receivable at December 31		38,800
Uncollectible accounts written off		13,300
Amount collected on accounts previously written off (after write off but before year end)		3,100

Assume that Ivanhoe Company decides to estimate its uncollectible accounts using the allowance method and an aging schedule. Uncollectible accounts are estimated to be $25,000. What amount of bad debt expense will Ivanhoe Company record if Allowance for Doubtful Accounts had an opening balance of $14,500 on January 1, 2021?

Bad debt expense

$

Answer 1

Answer

--Bad Debt Expense = $ 20,700

Adjusted balance required in Allowance account	$25,000	Credit
Allowance account beginning balance	$14,500	Credit
Written off	($13,300)
Previously written off collected	$3,100
Unadjusted balance available in Allowance account	$4,300	Credit
Bad Debt Expense	$20,700	[$ 25000 - 4300]