Question

As a result of a review and aging of accounts receivable in early January 2018, it has been determined that an allowance for doubtful accounts of16,000 is needed at December 31, 2017. What amount should Murphy record as "bad debt expense" for the year ended December 31, 2017?

Answer 1

Murphy should record a bad debt expense of $16,000 for the year ended December 31, 2017, which is the determined allowance for doubtful accounts after reviewing the accounts receivable.

Step-by-step explanation:

The student's question pertains to recording the bad debt expense for the year ended December 31, 2017, after reviewing the accounts receivable and determining an allowance for doubtful accounts of $16,000. The amount to be recorded as bad debt expense for the year is equivalent to the allowance for doubtful accounts needed at the end of the year. It is assumed that this amount is based on an assessment of expected credit losses on receivables and has not already been accounted for in the financial statements. Therefore, Murphy should record a bad debt expense of $16,000 for the year ended December 31, 2017.