Question

At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and in Allowance for Uncollectible Accounts of $970 (credit) before any adjustments. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. Bad debt expense for the year should be:a. $9,820. b. $9,681. c. $9,300. d. $8,780.

Answer 1

$5,250

Step-by-step explanation:

data provided :

Account balance in account receivable = $311,000

Allowance for Uncollectible Accounts = $970 (credit)

allowance for uncollectible accounts = 2% of accounts receivable

Now,

⇒ Bad debt expenses = 2% of accounts receivable - $970

or

⇒ Bad debt expenses = 0.02 × $311,000 - $970

or

⇒ Bad debt expenses = $6,220 - $970

or

⇒ Bad debt expenses = $5,250