Clark Company estimated the net realizable value of their accounts receivable as of December 31,2011,based on an aging schedule of accounts receivable,to be $165,000.Clark has also provided the following information:
The accounts receivable balance on December 31,2011 was $175,000.
Uncollectible accounts receivable written-off during 2011 totaled $12,000.
The allowance for doubtful accounts balance on January 1,2011 was $15,000.
How much is Clark's 2011 bad debt expense?

Question

Clark Company estimated the net realizable value of their accounts receivable as of December 31,2011,based on an aging schedule of accounts receivable,to be $165,000.Clark has also provided the following information:
 The accounts receivable balance on December 31,2011 was $175,000.
Uncollectible accounts receivable written-off during 2011 totaled $12,000.
The allowance for doubtful accounts balance on January 1,2011 was $15,000.
How much is Clark's 2011 bad debt expense?

Quizplus · Accepted Answer

The December 31, 2011 balance in allowance for uncollectible accounts ($10,000) equals the accounts receivable balance on December 31, 2011 ($175,000) minus the December 31, 2011 net realizable value of accounts receivable ($165,000). The December 31, 2011 balance in allowance for uncollectible accounts ($10,000) equals the balance in allowance for doubtful accounts on January 1, 2011 ($15,000) minus accounts receivable write-offs ($12,000) during 2011 plus the 2011bad debt expense ($7,000).

Clark Company Estimated the Net Realizable Value of Their Accounts