Answer:
$9,000
Explanation:
As for the information provided,
Current allowance for bad debts = $35,000
Expected year end allowance = $40,000
Bad Debt written off = $4,000 during the period.
While writing off entry shall be:
Allowance for bad debts A/c Dr. $4,000
To Accounts Receivables $4,000
This will simply reduce the balance of allowance by $4,000
Effective balance = $35,000 - $4,000 = $31,000
As the allowance account balance is credit in nature.
Now desired year end balance = $40,000
For this entry shall be:
Bad Debt Expense A/c Dr. $9,000
To Allowance for Bad Debts $9,000
The amount is calculated as follows:
Desired amount of allowance - Balance in allowance.
$40,000 - $31,000 = $9,000
