Question

The Soft Company has provided the following information after year-end adjustments:

• Allowance for doubtful accounts was $11,000 at the beginning of the year and $30,000 at the end of the year.
• Accounts receivable were $80,000 at the beginning of the year and $420,000 at the end of the year.
• Accounts written off as uncollectible totaled $21,000.
• Net sales totaled $2,720,000.
• Sales discounts were $102,000.

How much was Soft's bad debt expense for the year?

a. $1,200
b. $19,800.
c. $21,000.
d. $40,800

Answer 1

Answer:

The allowance for doubtful accounts at end of the year is $30,800, not $30,000

The correct option is D,$40,800

Explanation:

The bad debt expense for the current year is the sum of the ending allowance for doubtful debt plus the amount written off in the year as uncolletible minus the opening balance of allowance for doubtful debt.

Ending balance of allowance for doubtful debts is $30,800

The amount written off as uncollectible is $21,000

opening balance of allowance for uncollectible is $11,000

bad debt expense=$30,800+$21,000-$11,000=$40800