Manley operates a law practice on the accrual method and calendar year. At the beginning of the year Manley's firm had an allowance for doubtful accounts with a balance of $15,000. At the end of the year, Manley recorded bad debt expense of $23,000 and the balance of doubtful accounts had increased to $18,000. What is Manley's deduction for bad debt expense this year?

Question

Quizplus · Accepted Answer

The $23,000 recorded as bad debt expense for financial accounting purposes would have increased the allowance account; however, since the allowance increased $3,000, actual write-offs were $20,000.

Manley Operates a Law Practice on the Accrual Method and Calendar