Question

On January 1, All City Services has the following balances: Accounts Receivable $25,000 Bad Debts Expense $0 All City has the following transactions during January: Credit sales of $120,000, collections of credit sales of $81,000, and write-offs of $18,000. All City uses the direct write-off method. The amount of Bad Debts Expense for January is ________.

Answer 1

Answer:

$18,000

Explanation:

Under the direct write off method, the amount of bad debt expense is the amount that is written off during the period. The treatment of bad debt expense is that it shows in the debit side of the income statement

In mathematically,

Amount of bad debt expense = written off amount

Amount of bad debt expense = $18,000

All other information which is given is not relevant. Hence, ignored it