Question

Industrial Equipment Supply is a new business. During its first year of​ operations, credit sales were $ 45 comma 000and collections of credit sales were $ 33 comma 000.One​ account, $ 725​,was written off. Management uses the agingminusofminusreceivablesmethod to account for bad debts expense and estimated $ 550as uncollectible at year end. The ending balance of the Allowance for Bad Debts is​ ________.

Answer 1

$600

Step-by-step explanation:

The written down amount is $725, which is bad debt and provision is not required for it.

The increase in allowance for bad debt is always Written Off by using the provision and at the year end the amount that must have been written off is $600 which is the increase in the provision. This means that the Allowance for Bad Debts is​ $600.