Question

On December 31, 2021, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $67,000 and $1,075, respectively. During 2022, Larry's wrote off $2,200 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,300 at December 31, 2022. Bad debt expense for 2022 would be

Answer 1

$6,425

Step-by-step explanation:

The computation of the bad debt expense for the year 2022 is given below;

Given that

Beginning allowance for uncollectible accounts = $1,075

Accounts written-off = $2,200

Now

Unadjusted balance of allowance for uncollectible accounts is

= Beginning allowance for uncollectible accounts - Accounts written-off

= $1,075 - $2,200

= -$1,125

And, the Ending balance of allowance for uncollectible accounts is $5,300

So,

Bad debt expense is

= Ending balance of allowance for uncollectible accounts - Unadjusted balance of allowance for uncollectible accounts

= $5,300 - (-$1,125)

= $6,425