Question

WLC has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 8% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year?a. $ 532,000.b. $ 520,000.c. $1,920,000.d. $ 508,000.

Answer 1

$508,000

Step-by-step explanation:

Outstanding Receivables as on Dec 31 = $6,500,000

Required uncollectible receivables = 8% of $6,500,000 = $520,000

Less Opening allowance for doubtful debts $12,000

Allowance to be recognized this year $508,000