Question

Wave Inn's first year of operations is 2011. During the year the company had net credit sales of $2,939,000, bad debt write-offs of $99,000 (debit balance in the allowance for doubtful accounts), and cash collections of $2,060,000. At December 31, 2011, the company estimates that the net realizable value of accounts receivable is $750,000. What is the amount of bad debt expense reported on Wave Inn's income statement for the year ended December 31, 2011?

Answer 1

The amount of bad debt expense reported on Wave Inn's income statement for the year ended December 31, 2011 is $99,000

Step-by-step explanation:

Bad debt: The amount which is not received by the company in respect of goods delivered to the customer

The computation of the bad debt expense is shown below:

The bad debt expense should be reported at the written off value i.e $99,0000

No further calculation or computation is required as there is no relevance. Hence, all other information should be ignored