Question

On December 31, 2021, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $45,000 and $2,350, respectively. During 2022, Coolwear wrote off $675 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $4,200 at December 31, 2022. Bad debt expense for 2022 would be:

Answer 1

Total bad debts expense $2,525

Step-by-step explanation:

The computation of the bad debt expense for the year 2022 is shown below:

Allowance for uncollectible accounts on the year 2022 $4,200

Less:

Allowance for uncollectible accounts as on the year 2021 $2,350

Difference in Bad debts expense for 2022 $1,850

Add: Additional write off $675

Total bad debts expense $2,525