The data presented below for Lynx Corp.is for the year ended December 31, 2016: $$\begin{array} { l r }
\text { Sales (100\% on credit) } & \$ 1,000,000 \
\text { Sales returns } & 30,000 \
\text { Accounts Receivable (December 31,2016) } & 170,000 \
\text { Allowance for Doubtful Accounts [Cr. B alance] } & \
\quad \text { (Before adjustment at December 31, 2016) } & 1,300 \
\text { Estimated amount of uncollectible accounts based on aging analysis } & 14,000
\end{array}$$
-See the data for Lynx Corp. If Lynx Corp.uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2016?
A) $12,700
B) $13,700
C) $14,000
D) $15,300

Question

The data presented below for Lynx Corp.is for the year ended December 31, 2016: $$\begin{array} { l r } 
\text { Sales (100\% on credit) } & \$ 1,000,000 \
\text { Sales returns } & 30,000 \
\text { Accounts Receivable (December 31,2016) } & 170,000 \
\text { Allowance for Doubtful Accounts [Cr. B alance] } & \
\quad \text { (Before adjustment at December 31, 2016) } & 1,300 \
\text { Estimated amount of uncollectible accounts based on aging analysis } & 14,000
\end{array}$$
-See the data for Lynx Corp. If Lynx Corp.uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2016?
A) $12,700
B) $13,700
C) $14,000
D) $15,300

Quizplus · Accepted Answer

The bad debt expense is calculated as the difference between the estimated amount of uncollectible accounts based on the aging analysis ($14,000) and the existing credit balance in the Allowance for Doubtful Accounts ($1,300). Thus, the bad debt expense for 2016 is $14,000 - $1,300 = $12,700.

The Data Presented Below for Lynx Corp -See the Data for Lynx Corp