A company's allowance for doubtful accounts is $4,000 and $3,000 on 1/1/18 and 1/1/17, respectively. During 2017, bad debt expense was estimated to be 6% of net credit sales of $100,000. During 2017, the amount of accounts written off as uncollectible amounts to
A)$6,000.
B)$7,000.
C)$5,000.
D)$4,000.

Question

Quizplus · Accepted Answer

The bad debt expense for 2017 is calculated as 6% of $100,000, which equals $6,000. The allowance for doubtful accounts increased from $3,000 at the beginning of the year to $4,000 at the end, an increase of $1,000. To find the amount written off, subtract the increase in the allowance from the bad debt expense: $6,000 (bad debt expense) - $1,000 (increase in allowance) = $5,000 written off.

A Company's Allowance for Doubtful Accounts Is $4,000 and $3,000