Jack Company provides for bad debt expense at the rate of 2% of accounts receivable.The following data are available for 2021: The Allowance for Doubtful Accounts balance at December 31, 2021, should be

Question

Jack Company provides for bad debt expense at the rate of 2% of accounts receivable.The following data are available for 2021:  The Allowance for Doubtful Accounts balance at December 31, 2021, should be

Quizplus · Accepted Answer

To find the Allowance for Doubtful Accounts balance at December 31, 2021, we need to calculate the bad debt expense for the year and subtract any previous balance in the allowance account.

First, we need to calculate the 2% of accounts receivable for the year:

2% x $1,200,000 = $24,000

So the bad debt expense for the year is $24,000.

Next, we need to subtract any previous balance in the Allowance for Doubtful Accounts account. The question doesn't provide this information, so we assume that there was no previous balance.

Therefore, the ending balance in the Allowance for Doubtful Accounts account should be $24,000.

Therefore, the correct answer is D) $24,000.

Jack Company Provides for Bad Debt Expense at the Rate