Final answer:
The December 31, 20x1 balance in the Allowance for Doubtful Accounts for Norn Company would be $20,000, calculated by taking the starting credit balance and adjusting for bad debt expense and write-offs.
Step-by-step explanation:
The student's question is about calculating the December 31, 20x1 balance in the Allowance for Doubtful Accounts for Norn Company after recording both bad debt expense and the write-off of an uncollectible trade receivable. At the beginning of the year, the credit balance in the allowance account was $10,000. The company recorded a bad debt expense of $15,000, which would increase the allowance account. However, they also wrote off an uncollectible receivable of $5,000, which would decrease the allowance account.
To calculate the year-end balance, we start with the beginning balance of the allowance account, add the bad debt expense, and then subtract the write-off. So the calculation is as follows:
- Beginning Credit Balance: $10,000
- Add: Bad Debt Expense: $15,000
- Subtract: Write-off: $5,000
This results in an ending balance of $10,000 + $15,000 - $5,000 = $20,000, which corresponds to option (c).