The following information is related to December 31, 2013 balances. $\begin{array}{lc}
\text {- Accounts receivable } & \$ 700,000 \
\text {- Allowance for doubtful accounts (credit) } & (60,000) \
\text {- Cash realizable value } & 640,000
\end{array}$ During 2014 sales on account were $195,000 and collections on account were $115,000. Also, during 2014 the company wrote off $11,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $72,000. Bad debt expense for 2014 is:
A) $23,000.
B) $12,000.
C) $72,000.
D) $ 1,000.

Question

Quizplus · Accepted Answer

The allowance account needs to be adjusted to $72,000. Starting with a balance of $60,000, after writing off $11,000, the balance is $49,000. To reach $72,000, an additional $23,000 is needed as bad debt expense.

The Following Information Is Related to December 31, 2013 Balances