Question

Helix reported the following information in its financial statements. Write-offs of accounts receivable were $230 in the current year. Helix did not recover any write-offs.

At December 31 Current Year Prior Year
Accounts receivable $ 5,600 $4,300
Allowance for doubtful accounts 460 380
Accounts receivable, net $ 5,140 $ 3,920

Determine Bad Debts Expense for the current year.

Answer 1

To calculate the Bad Debts Expense for the current year, we adjusted the Allowance for Doubtful Accounts for write-offs, resulting in a $310 expense.

Step-by-step explanation:

The Bad Debts Expense for the current year can be determined by analyzing the changes in the Allowance for Doubtful Accounts and considering the write-offs during the year. To start, we calculate the ending balance of the Allowance for Doubtful Accounts that would be needed without any write-offs:

Beginning balance + Bad Debts Expense - Write-offs = Ending balance

$380 + Bad Debts Expense - $230 = $460

Now, we solve for the Bad Debts Expense:

Bad Debts Expense = $460 - $380 + $230

Bad Debts Expense = $310

Therefore, the Bad Debts Expense for the current year is $310.