Answer:
The Allowance for Doubtful Accounts balance at December 31, 2018, should be $35,613.
Explanation:
The question did not tell us whether the ending balance of accounts receivable had already been adjusted for with the write-off that happened during the year. If we assume, it was not adjusted for, the required journals would be:
Debit Allowance for doubtful accounts $9,900
Credit Accounts receivable $9,900
(To write-off accounts receivable)
The impact on accounts receivable is $1,197,000 - $9,900 = $1,187,100
The impact on Allowance for doubtful accounts is $11,900 - $9,900 = $2,000
3% of accounts receivable ($1,187,100) = $35,613
The required bad debt expense is $35,613 - $2,000 = $33,613
Debit Bad debt expense $33,613
Credit Allowance for doubtful accounts $33,613
(To record bad debt expense for the year)
