Question

On December 31, 2018, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $75,000 and $1,250, respectively. During 2019, Larry's wrote off $2,175 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,150 at December 31, 2019. Bad debt expense for 2019 would be:

Answer 1

Answer:

Bad debt expense for 2019 would be $6,075

Explanation:

We know that,

Ending balance of Allowance for Uncollectible Accounts = Beginning balance of Allowance for Uncollectible Accounts + 2019 bad debts - 2019 write off amount

$5,150 = $1,250 + 2019 bad debts - $2,175

$5,150 = -$925 + 2019 bad debts

So,2019 bad debts = $5,150 + $925 = $6,075

We do not consider the beginning balance of the accounts receivable