Question

The following information is available for Marigold Corp.: Allowance for doubtful accounts at December 31, 2019 $23000 Credit sales during 2020 1250000 Accounts receivable deemed worthless and written off during 2020 26800 As a result of a review and aging of accounts receivable in early January 2021, it has been determined that an allowance for doubtful accounts of $16700 is needed at December 31, 2020. What amount should Marigold record as "bad debt expense" for the year ended December 31, 2020?

Answer 1

Answer: $20500

Explanation:

Bad debt is the amount of money that a credit owes the company and is not willing to be paid hence may not be collected.

The amount that Marigold should record as "bad debt expense" for the year ended December 31, 2020 goes thus:

Bad debt allowance balance needed =

$16700

Add: Bad debt that are written off = $26800

Less: Allowance for doubtful accounts = $23000

Bad debt expense will now be:

= $16700 + $26800 - $23,000

= $43500 - $23000

= $20500