Using the following information: $$\begin{array} { l r }
&\underline { 12 / 31 / 15 } \
\text { Accounts receivable } & \$ 525,000 \
\text { Allowance } &\underline { ( 40,000 ) } \
\text { Cash realizable value } & \underline { \$ 485,000 }\
\end{array}$$

- During 2016 sales on account were $145000 and collections on account were $100000. Also during 2016 the company wrote off $5000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $45000. Bad debt expense for 2016 is
A) $35000.
B) $5000.
C) $10000
D) $45000.

Question

Using the following information: $$\begin{array} { l r } 
&\underline { 12 / 31 / 15 } \
\text { Accounts receivable } &  \$ 525,000 \
\text { Allowance } &\underline { ( 40,000 ) } \
\text { Cash realizable value } & \underline { \$ 485,000 }\
\end{array}$$

- During 2016 sales on account were $145000 and collections on account were $100000. Also during 2016 the company wrote off $5000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $45000. Bad debt expense for 2016 is
A) $35000.
B) $5000.
C) $10000
D) $45000.

Quizplus · Accepted Answer

The bad debt expense for 2016 is calculated by adding the amount of accounts written off during the year ($5000) to the estimated uncollectible accounts ($45000), and then subtracting the amount of collections on account ($100000).

Bad debt expense = accounts written off + estimated uncollectible accounts - collections on account 
Bad debt expense = $5000 + $45000 - $100000 
Bad debt expense = $10000

Using the Following Information - During 2016 Sales on Account Were $145000 and Collections