Question

Using the following information:

12/31/12
Accounts receivable $ 525,000
Allowance (35,000 )
Cash realizable value $ 490,000

During 2013, sales on account were $145,000 and collections on account were $100,000. Also during 2013, the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000.

Bad debts expense for 2013 is

Answer 1

The bad debts expense for 2013 is $522,000.

Step-by-step explanation:

The bad debts expense for 2013 can be calculated by considering the sales on account, collections on account, write-offs, and the estimated uncollectible accounts. The calculation is as follows:

1. Add the sales on account to the beginning balance of accounts receivable: $525,000 + $145,000 = $670,000.
2. Subtract the collections on account: $670,000 - $100,000 = $570,000.
3. Add the write-offs: $570,000 - $8,000 = $562,000.
4. Subtract the estimated uncollectible accounts: $562,000 - $40,000 = $522,000.

Therefore, the bad debts expense for 2013 is $522,000.