On December 31, 2019, Paper Company's accounts receivable balance was of $600,000, and an analysis of their accounts receivable suggests that the Allowance for Doubtful Accounts should be 2% of accounts receivable. The balance in the Allowance for Doubtful Accounts on January 1, 2019 was $11,940 (credit). During the year 2019, Paper wrote off $12,900 of bad debts.
What amount should be reported as the Bad debt expense for the year 2019?

Question

Quizplus · Accepted Answer

Year-end Allowance = Beginning Allowance + Bad Debt expense - Write-offs
($600,000 x 2%) = $11,940 + X - $12,900
$12,000 = $11,940 + X - $12,900
X = $12,960

On December 31, 2019, Paper Company's Accounts Receivable Balance Was