Using the following information: During 2015, sales on account were $145,000 and collections on account were $100,000. Also during 2015, the company wrote off $4,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000. Bad debt expense for 2015 is

Question

Using the following information:  During 2015, sales on account were $145,000 and collections on account were $100,000. Also during 2015, the company wrote off $4,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000. Bad debt expense for 2015 is

Quizplus · Accepted Answer

Bad debt expense for 2015 is calculated as the sum of the write-offs and the estimated uncollectible accounts, minus the change in allowance for doubtful accounts.

Bad debt expense = write-offs + estimated uncollectible accounts - change in allowance for doubtful accounts

Bad debt expense = $4,000 + $40,000 - ($40,000 - $5,000)

Bad debt expense = $4,000 + $40,000 - $35,000

Bad debt expense = $9,000

Therefore, the answer is C) $9,000.

Using the Following Information: During 2015, Sales on Account