The following information is from the records of Armadillo Camera Shop: $$\begin{array} { | l | r | }
\hline\text { Accounts receivable, December 31, 2014 } & \$ 80,000 \text { (debit) } \
\hline \text { Net credit sales for 2014 } & 165,000 \
\hline \text { Accounts written off as uncollectible during 2014 } & 15,000 \
\hline \text { Cash sales during 2014 } & 40,000 \
\hline
\end{array}$$ The company uses the direct write-off method for bad debts. What is the amount of bad debts expense?

Question

The following information is from the records of Armadillo Camera Shop: $$\begin{array} { | l | r | } 
\hline\text { Accounts receivable, December 31, 2014 } & \$ 80,000 \text { (debit) } \
\hline \text { Net credit sales for 2014 } & 165,000 \
\hline \text { Accounts written off as uncollectible during 2014 } & 15,000 \
\hline \text { Cash sales during 2014 } & 40,000 \
\hline
\end{array}$$  The company uses the direct write-off method for bad debts. What is the amount of bad debts expense?

Quizplus · Accepted Answer

Under the direct write-off method, bad debts expense is recognized when specific accounts are deemed uncollectible. Therefore, the amount of bad debts expense is the total accounts written off during the year, which is $15,000.

The Following Information Is from the Records of Armadillo Camera