During 20A, Thomas Company recorded bad debt expense of $15,000 and wrote off an uncollectible trade receivable amounting to $5,000. Assuming a January 1, 20A, credit balance in the allowance for doubtful accounts of $10,000, the December 31, 20A, balance in the allowance account would be which of the following?

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The allowance for doubtful accounts is used to estimate the amount of accounts receivable that are expected to be uncollectible. The initial balance on January 1, 20A, was $10,000. The bad debt expense for the year was $15,000, which increases the balance in the allowance account to $25,000. The write-off of the uncollectible trade receivable of $5,000 reduces the balance in accounts receivable, but does not affect the balance in the allowance account. Therefore, the December 31, 20A, balance in the allowance for doubtful accounts would be $20,000 ($10,000 + $15,000 - $5,000).

During 20A, Thomas Company Recorded Bad Debt Expense of $15,000