Question

On December 31, 2021, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $53,600 and $1,325, respectively. During 2022, Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31, 2022. Bad debt expense for 2022 would be:(A) $1,280.(B) $1,465.(C) $1,420.(D) $1,140.

Answer 1

(C) $1,420

Step-by-step explanation:

The computation of the bad debt expense for 2022 is shown below:

Ending balance of Allowance for Uncollectible Accounts = Beginning balance of Allowance for Uncollectible Accounts + bad debts expense - 2022 write off amount

$1,280 = $1,325 + bad debt expense - $1,465

$1,280 + $140 = Bad debt expense

So, the bad debt expense is $1,420