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Need help with Accounting Homework Bad Debt Expenses?


Allowance for Bad Debts was $1200 at the beginning of the year. $1500 of accounts receivable were written off. End of year adjusted balance in allowance for Bad Debts was $1700. What is the amount of bad debt expense for the year?

I figured this:
1200 - 1500 = (-300) since the write offs were more than the allowance at the beginning of the year.
1700 - (-300) = 2000 total bad debt expense for the year

Can someone double check my math?
Thanks!

538 day(s) ago

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Answers (1)

tranglu 		Your answer is correct: $2000.

I'd have reasoned it out a bit differently. The entry to allocate Bad Debts Expense at the end of the year is a debit to Bad Debts Expense and a credit to Allowance for Bad Debts. As accounts become uncollectable, they are written off by crediting Accounts Receivable and debiting Allowance for Bad Debts. Setting up T accounts:

Allowance for Bad Debts
----------------|------------------
. . . . . . . . | $1200 balance
$1500 . . . | $2000
-----------------------------------
. . . . . . . . | $1700 balance

Accounts Receivable
----------------|------------------
. . . . . . . . | $1500

Bad Debts Expense
----------------|------------------
$2000 . . . |

Posted 538 days ago

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