Question

Concord Company provides for bad debt expense at the rate of 2% of accounts receivable. The following data are available for 2018: Allowance for doubtful accounts, 1/1/18 (Cr.) $ 12700 Accounts written off as uncollectible during 2018 9200 Ending accounts receivable 1199000 The Allowance for Doubtful Accounts balance at December 31, 2018, should be $3500.00. $20480.00. $27480.00. $23980.00.

Answer 1

$27,480

Step-by-step explanation:

Calculation for Allowance for Doubtful Accounts balance at December 31, 2018

Using this formula

Allowance for Doubtful Accounts=( Ending accounts receivable ×Bad debt expense rate ) + (Allowance for doubtful accounts -Accounts written off as uncollectible)

Let plug in the formula

Allowance for Doubtful Accounts=(1,199,000 ×2%) +(12,700-9,200)

Allowance for Doubtful Accounts =23,980+3,500

Allowance for Doubtful Accounts= $27,480

Therefore the Allowance for Doubtful Accounts balance at December 31, 2018 should be $27,480