Question

Ballman Corporation uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Bad Debts had a credit balance of $2,000. During the year, Ballman wrote off uncollectible receivables of $4,200. Ballman also recorded an adjusting entry for $4,000 of bad debt for the current year. What is Ballman's year-end balance in Allowance for Bad Debts? A. $1,600. B. $4,800. C. $3,700. D. $600.

Answer 1

Answer:

Closing balance of bed debts = $1,800

Explanation:

Given:

Opening balance of bed debts = $2,000

Uncollected receivables = $4,200

Bed debts during the year = $4,000

Closing balance of bed debts = ?

Computation of closing balance of bed debts:

Closing balance of bed debts = Opening balance of bed debts - Uncollected receivables + Bed debts during the year

Closing balance of bed debts = $2,000 - $4,200 + $4,000

Closing balance of bed debts = $1,800