Jill Company provides for bad debt expense at the rate of 3% of credit sales. The following data are available for 2016: $\begin{array}{ll}
\text {Allowance for doubtful accounts, $ 1 / 1 / 16(\mathrm{Cr} $.) } &\$15,000\
\text { Accounts written off as uncollectible during 2016 } &9,000\
\text { Credit sales in 2016 } &1,000,000
\end{array}$

The Allowance for Doubtful Accounts balance at December 31 2016 should be

Question

Jill Company provides for bad debt expense at the rate of 3% of credit sales. The following data are available for 2016: $\begin{array}{ll}
  \text {Allowance for doubtful accounts, $ 1 / 1 / 16(\mathrm{Cr} $.)   } &\$15,000\
 \text { Accounts written off as uncollectible during 2016 } &9,000\
 \text {  Credit sales in 2016 } &1,000,000
\end{array}$

The Allowance for Doubtful Accounts balance at December 31 2016 should be

Quizplus · Accepted Answer

The allowance for doubtful accounts is calculated as the beginning balance plus bad debt expense minus accounts written off. Bad debt expense is 3% of $1,000,000, which is $30,000. The ending balance is $15,000 + $30,000 - $9,000 = $36,000.

Jill Company Provides for Bad Debt Expense at the Rate