On January 1, Davidson Services has the following balances: Davidson has the following transactions during January: Credit sales of $100,000, collections of credit sales of $85,000, and write-offs of $15,000. Davidson uses the direct write-off method. At the end of January, the balance in Bad Debts Expense is:

Question

On January 1, Davidson Services has the following balances:  Davidson has the following transactions during January: Credit sales of $100,000, collections of credit sales of $85,000, and write-offs of $15,000. Davidson uses the direct write-off method. At the end of January, the balance in Bad Debts Expense is:

Quizplus · Accepted Answer

The direct write-off method means that bad debts are written off as they occur. Based on the transactions provided, Davidson wrote off $15,000 in bad debts during January. Therefore, the balance in Bad Debts Expense at the end of January would be equal to the amount written off, which is $15,000.

On January 1, Davidson Services Has the Following Balances