Question

On December 31, 2021, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $40,000 and $1,700, respectively. During 2022, Coolwear wrote off $875 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,600 at December 31, 2022. Bad debt expense for 2022 would be:

Answer 1

Answer:

$4,775

Explanation:

Given that,

Allowance for Uncollectible Accounts = $1,700

Write off in Accounts receivable during the year = $875

Allowance for Uncollectible Accounts required = $5,600

Closing Allowance for Uncollectible Accounts:

= Allowance for Uncollectible Accounts - Write off in Accounts receivable during the year

= $1,700 - $875

= $825

Bad debt expense for 2022:

= Allowance for Uncollectible Accounts required - Closing Allowance for Uncollectible Accounts

= $5,600 - $825

= $4,775