Question

sheridan ltd.'s allowance for expected credit losses was $78200 at the end of 2023 and $96600 at the end of 2022. for the year ended december 31, 2023, sheridan reported a loss on impairment of $16560 in its income statement. what amount did sheridan debit to allowance for expected credit losses during 2023 to write off actual bad debts?

Answer 1

Sheridan Ltd. debited $35,960 to their allowance for expected credit losses during 2023 to write off actual bad debts. This was calculated using the beginning and ending balance of the allowance and the reported loss on impairment for the year.

Step-by-step explanation:

To determine the amount Sheridan Ltd. debited to the allowance for expected credit losses during 2023 for the write-off of actual bad debts, we use the following information: Beginning balance of the allowance for expected credit losses: $96,600 (at the end of 2022). Ending balance of the allowance for expected credit losses: $78,200 (at the end of 2023). Loss on impairment (expense recognized) for the year: $16,560. The journal entry to record the impairment loss would typically include a debit to bad debt expense and a credit to the allowance for expected credit losses. Therefore, to calculate the amount written off during the year, we perform the following calculation: Beginning balance - Ending balance + Loss on impairment = Amount debited to write off bad debts: $96,600 - $78,200 + $16,560 = $35,960. Hence, Sheridan Ltd. debited $35,960 to their allowance for expected credit losses to write off actual bad debts during the year 2023.