Question

On December 31, 2010, Larry's Used Cars had balances in its accounts receivable and allowance for uncollectible accounts of $53,600 and $1,325 respectively. During 2011, Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31, 2011. Bad debt expense for 2011 would be:

Answer 1

Bad debt expense for 2011 would be: $1,420

Step-by-step explanation:

On December 31, 2010, Larry's Used Cars had balance in its allowance for uncollectible accounts of $1,325.

During 2011, Larry's wrote off $1,465 in accounts receivable by the journal entry:

Debit Allowance for uncollectible accounts $1,465

Credit Accounts receivable $1,465

At December 31, 2011, before adjusting, the Allowance for uncollectible accounts had debit balance of $140 ($1,465 - $1,325 = $140)

Larry's Used Cars determined that there should be an allowance for uncollectible accounts of $1,280 at December 31, 2011.

Bad debt expense for 2011 = $1,280 + $140 = $1,420