Question

Back Corporation uses the allowance method to account for uncollectible receivables. At the beginning of the​ year, Allowance for Bad Debts had a credit balance of $ 900. During the year Back wrote off uncollectible receivables of $ 2 comma 500. Back recorded Bad Debts Expense of $ 3 comma 000. What is Back's ​year-end balance in Allowance for Bad​ Debts?

Answer 1

$1,400

Step-by-step explanation:

beginning balance of allowance for doubtful accounts $900

$2,500 were written off

bad debt expense of $3,000

the ending balance of the allowance for doubtful accounts will be = beginning balance - write offs + bad debt expense = $900 - $2,500 + $3,000 = $1,400

the journal entries to record the write off and the bad debt expense were:

Dr Allowance for doubtful accounts 2,500

Cr Accounts receivable 2,500

Dr Bad debt expense 3,000

Cr Allowance for doubtful accounts 3,000