Question

In the balance sheet at the end of its first year of operations, Dinty Inc. reported an allowance for uncollectible accounts of $82,000 During the year. Dinty wrote off $32,000 of accounts receivable they had attempted to collect and failed. Credit sales for the year were $2, 200,000, and cash collections from credit customers totaled $1, 950,000.

What bed debt expense would Dinty report in its first-year income statement?
A. $50,000.
B. $12,000.
C. $114.000.
D. Can't be determined from the given information.
What accounts receivable balance would Dinty report in its first year-end balance sheet?.
A. $196,000.
B. $211000.
C. $230,000.
D. None of the above is correct
Dim's adjusting entry for bad debts at year-end, which of these would be included?
A. Debit to bed debt expense for SI 14.000
B. Credit to allowance for uncollectible accounts for $82,000
C. Debit to accounts receivable for $32,000
D. All of the above are correct.

Answer 1

Answer and Explanation:

The computation is shown below:

a. The bad debt expense is

= change in allowance balance + wrote offs

= $82000 + $32000

= $112,000

b. the account receivable balance that should be reported is

= credit sales - cash collection - wrote offs

= $2,200,000 - $1,950,000 - $32,000

= $218,000

c. The adusting entry should be

Bad debt expense Dr $114,000

To allowance for doubtful debts $114,000

(Being bad debt expense is recorded)

here the correct option is a.