Question

Assume the Murtha Company reported the following adjusted account balances at year-end. 2016 2015 Accounts Receivable $1,560,200 $1,210,920 Allowance for Doubtful Accounts (79,000) (64,600) Accounts Receivable, Net $1,481,200 $1,146,320 Assume the company recorded no write-offs or recoveries during 2016. What was the amount of Bad Debt Expense reported in 2016

Answer 1

Step-by-step explanation:

Given,

IN 2015

Accounts Receivable = $1,210,920

Allowance for Doubtful Accounts = (64,600)

Accounts Receivable, Net = $1,146,320

IN 2016

Accounts Receivable = $1,560,200

Allowance for Doubtful Accounts = (79,000)

Accounts Receivable, Net = $1,481,200

If the company recorded no write-offs or recoveries during 2016 then no write off in the accounts receivable for 2015 must have been carried forward. $80, 800 due to Allowance for Doubtful Accounts for that year 2015 is brought forward into Allowance for Doubtful Accounts in 2016

Therefore Allowance for Doubitfull accounts Beginning balance in 2016 Credit $80,800

So......

Bad Debt Expense reported in 2016 = Allowance for Doubtful Accounts 2016 - Allowance for Doubtful Accounts beginning balance (i .e D/A carried forward)

= 79,000 - 64,600

= $14,400