Question

As of December 31, 2021, Amy Jo's Appliances had unadjusted account balances in accounts receivable of $320,000 and $960 in the allowance for uncollectible accounts, following 2021 write-offs of $6,510 in bad debts. An analysis of Amy Jo's December 31, 2021, accounts receivable suggests that the allowance for uncollectible accounts should be 4% of accounts receivable. Bad debt expense for 2021 should be:

Answer 1

Bad debt expense$11,840

Step-by-step explanation:

Amy Jo's Appliances

A/R 12/31/2021 $320,000×4%

Allowance balance required$ 12,800

Pre-adjustment Allowance balance(960)

Bad debt expense$11,840

Therefore the Bad debt expense for 2021 should be: $11,840