The following information is related to December 31, 2016 balances. $\begin{array}{lc}
\text { Accounts receivable } & \$ 3,150,000 \
\text { Allowance for doubtful accounts (credit) } & (270,000) \
\text { Cash realizable value } & \$ 2,880,000
\end{array}$ During 2017 sales on account were $870,000 and collections on account were $516,000. Also during 2017 the company wrote off $48,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $324,000. Bad debt expense for 2017 is
A)$102,000.
B)$ 54,000.
C)$324,000.
D)$ 6,000.

Question

Quizplus · Accepted Answer

The allowance for doubtful accounts needs to be adjusted to $324,000. Starting with a credit balance of $270,000, after writing off $48,000, the balance is $222,000. To reach $324,000, an additional $102,000 is needed as bad debt expense.

The Following Information Is Related to December 31, 2016 Balances