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WINSTONCH [101]
3 years ago
15

Manley operates a law practice on the accrual method and calendar year. At the beginning of the year Manley's firm had an allowa

nce for doubtful accounts with a balance of $13,900. At the end of the year, Manley recorded bad debt expense of $21,200 and the balance of doubtful accounts had increased to $19,800. What is Manley's deduction for bad debt expense this year?
Business
1 answer:
svlad2 [7]3 years ago
3 0

Answer:

$15,300

Explanation:

Allowance for doubtful account at the beginning of the year $13,900

Less increased in the balance of doubt account $19,800

Balance $5,900

Therefore:

Bad debt at the end of the year $21,200- $5,900 =$15,300

The bad debt expense represents the direct write off of bad accounts ($15,300) in which it also represents an increase in the allowance account which is an estimate of bad accounts to be written off in the future ($5,900). Therefore the increase in the allowance account cannot be deducted.

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