Question

At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $311,000 and $970 (debit) in Allowance for Uncollectible Accounts. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. Bad debt expense for the year should be:

Answer 1

The bad debt expense for the year is $7,150

Step-by-step explanation:

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

= Account receivable × given percentage + debit balance in Allowance for Uncollectible Accounts

= $311,000 × 2% + $930

= $6,220 + $930

= $7,150

Hence, the bad debt expense for the year is $7,150

We simply applied the above formula