Question

On December 31, 2021, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $53,600 and $1,325, respectively. During 2022, Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31, 2022. Bad debt expense for 2022 would be:

Answer 1

Answer:

$1,420

Explanation:

The computation of the bad debt expense is shown below:

As we know that

Ending balance of allowance for uncollectible accounts = Beginning balance of allowance for uncollectible accounts + bad debt expense - written off amount

$1,280 = $1,325 + bad debt expense - $1,465

So, the bad debt expense for the year 2022 is $1,420

Basically we applied the above formula to find out the bad debt expense