Answer:
1. the year-end balance in allowance for uncollectible accounts is $6,680.
2. The bad debt for the year is -$2,320.
Explanation:
1. To calculate the year-end balance in allowance for uncollectible accounts:
First we calculate the Account Receivable which is calculated as thus:
==> Account Receivable (ending balance) = accounts receivable (beginning balance) + Credit sales - cash collected - written off accounts receivable.
==> 300,000 + 1,500,000 - 1,450,000 - 16,000 = $334,000
Therefore the account receivable = $334,000.
Estimated percentage of bad debts = 2%
allowance of uncollectible accounts = Account Receivable x Estimated percentage.
==> $334,000 x 2% = $6,680
Hence, the year-end balance in allowance for uncollectible accounts is $6,680.
2. To calculate the bad debt expense for the year, we use:
allowance of uncollectible acountsl (ending balance) - [Allowance of uncollectible account (opening balance) - accounts receivables written off)
==> $6,680 - ($25,000 - $16,000)
= 6,680 - 9,000
= -$2,320
The bad debt for the year is -$2,320. This is incurred when customers pay for an invoice when it has been written off.
