Oliver, Inc. estimated uncollectible accounts receivable at December 31, 2019 at $3,372, based on estimates on various ages of receivables and before learning of the bankruptcy of one of its customers. The customer owed $1,340, and the legal department has estimated costs to collect the balance owed by this customer at $2,000. The gross receivables balance on December 31, 2019 after write-offs is $84,300, and the allowance for doubtful accounts balance is $3,620 at December 31, 2018. At December 12, 2019, the company wrote off $1,700 other accounts deemed uncollectible.
Required:
a. How would the legal department advise Oliver to handle the collection of the $1,340?
b. What is the amount of Bad Debt Expense Oliver will report for 2109, assuming that both the $1,700 and $1,340 have been written off.
c. What is the effect of the $1,700 write off on gross and net accounts receivable?

Question

Oliver, Inc. estimated uncollectible accounts receivable at December 31, 2019 at $3,372, based on estimates on various ages of receivables and before learning of the bankruptcy of one of its customers. The customer owed $1,340, and the legal department has estimated costs to collect the balance owed by this customer at $2,000. The gross receivables balance on December 31, 2019 after write-offs is $84,300, and the allowance for doubtful accounts balance is $3,620 at December 31, 2018. At December 12, 2019, the company wrote off $1,700 other accounts deemed uncollectible. 
Required:
a. How would the legal department advise Oliver to handle the collection of the $1,340?
b. What is the amount of Bad Debt Expense Oliver will report for 2109, assuming that both the $1,700 and $1,340 have been written off.
c. What is the effect of the $1,700 write off on gross and net accounts receivable?

Quizplus · Accepted Answer

The Answer of Oliver, Inc. estimated uncollectible accounts receivable at December 31, 2019 at $3,372, based on estimates on various ages of receivables and before learning of the bankruptcy of one of its customers. The customer owed $1,340, and the legal department has estimated costs to collect the balance owed by this customer at $2,000. The gross receivables balance on December 31, 2019 after write-offs is $84,300, and the allowance for doubtful accounts balance is $3,620 at December 31, 2018. At December 12, 2019, the company wrote off $1,700 other accounts deemed uncollectible. 
Required:
a. How would the legal department advise Oliver to handle the collection of the $1,340?
b. What is the amount of Bad Debt Expense Oliver will report for 2109, assuming that both the $1,700 and $1,340 have been written off.
c. What is the effect of the $1,700 write off on gross and net accounts receivable?