Final answer:
Sheridan Company should record a bad debt expense of $17,700 for the year ended December 31, 2017, to adjust the Allowance for Doubtful Accounts to the required year-end balance of $16,800, taking into account the receivables that were written off.
Step-by-step explanation:
The student has asked the question: What amount should Sheridan record as "bad debt expense" for the year ended December 31, 2017?
To calculate the bad debt expense for 2017, we must adjust the Allowance for Doubtful Accounts to reflect the required balance of $16,800 at year-end. The beginning balance in the allowance account was $24,100, and during the year, $25,000 of receivables were written off as uncollectible. The year-end adjustment must account for write-offs and bring the allowance to the desired ending balance.
The bad debt expense is determined through the following calculation:
- Subtract the receivables written off ($25,000) from the beginning balance of the allowance account ($24,100) to get the adjusted balance before year-end adjustment, which is -$900.
- Then, since the desired ending balance of the allowance account is $16,800, and the current adjusted balance is -$900, we need to add back enough to reach the desired balance. This is done by recording an expense of $16,800 (desired balance) minus -$900 (adjusted balance), equaling $17,700.
Therefore, Sheridan should record a bad debt expense of $17,700 for the year ended December 31, 2017.