Question

Lynx Corp.

The data presented below for Lynx Corp. is for the year ended December 31, 2016:

Sales (100% on credit) $1,000,000
Sales returns $30,000
Accounts Receivable (December 31, 2016) $170,000
Allowance for Doubtful Accounts [Cr. Balance]
(Before adjustment at December 31, 2016) $1,300
Estimated amount of uncollectible accounts based on aging analysis $14,000

See the data for Lynx Corp.

If Lynx Corp. uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2016?

a. $12,700
b. $14,000
c. $15,300
d. $13,700

Answer 1

The bad debt expense for Lynx Corp. for the year ended December 31, 2016, is calculated as $12,700, which is the difference between the estimated uncollectible accounts amount and the existing allowance for doubtful accounts balance.

Step-by-step explanation:

The question pertains to the calculation of bad debt expense using the aging of accounts receivable method for Lynx Corp for the year ended December 31, 2016. The Allowance for Doubtful Accounts has a credit balance of $1,300 before adjustment, and the aging analysis estimates uncollectible accounts at $14,000. The bad debt expense is the difference between the estimated uncollectible accounts and the existing credit balance in the allowance account. Therefore, the bad debt expense for 2016 is calculated as $14,000 (estimated uncollectible) - $1,300 (existing allowance) = $12,700.