Question

On December 31, 2021, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $49,000 and $2,150, respectively. During 2022, Coolwear wrote off $700 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,900 at December 31, 2022. Bad debt expense for 2022 would be:______

Answer 1

$4,450

Step-by-step explanation:

Bad debt expense is the expenses that a company incur as a result of the debt owned to the company by its customers, which are not recoverable.

The bad debt expenses for Coolwear inc. would be calculated as;

Bad debt expense = Allowance for uncollectible accounts - (Uncollectible account balance - accounts receivable written off)

= $5,900 - ($2,150 - $700)

= $4,450

Therefore, bad debt expense for 2022 would be $4,450