Question

At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $300,000 and in Allowance for Uncollectible Accounts of $660 (credit) before any adjustments. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 5% of accounts receivable. Bad debt expense for the year should be:

Answer 1

300,000 × 2% = 15,000

15,000 + 660 = 15,660

The correct answer is $15,660