Question

At the beginning of 2017, Yummy Cupcakes, Inc. has the following ledger balances: Accounts Receivable $40,000 (Debit) Allowance for Bad Debts $5,000 (Credit) During the year, credit sales amounted to $820,000. Cash collected on credit sales amounted to $750,000, and $16,000 has been written off. Yummy Cupcakes uses the aging-of-receivables method to record bad debts expense. The estimate of uncollectible accounts was $29,000. The ending balance in the Allowance for Bad Debts is ________.

Answer 1

The ending balance in the Allowance for Bad Debts is $29,000

Step-by-step explanation:

The computation of the ending balance in the Allowance for Bad debts is shown below:

= Estimation of the uncollectible accounts

= $29,000

As for calculating the bad debts expense, the business organization has to do an estimate based on this, the company could create the allowance for bad debts.

The other information which is given in the question is not relevant. Hence, ignored it