Sudan Ltd.'s allowance for doubtful accounts was $85,000 at the end of 2020 and $105,000 at the end of 2019. For the year ended December 31, 2020, Sudan reported bad debt expense of $18,000 in its income statement. What amount did Sudan debit to allowance for doubtful accounts during 2020 to write off actual bad debts?

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The allowance for doubtful accounts increased from $105,000 at the end of 2019 to $85,000 at the end of 2020, indicating that $20,000 more in receivables were deemed uncollectible than were initially anticipated. However, the company also recognized $18,000 in bad debt expense during the year. To find the amount debited to write off actual bad debts, we add the decrease in the allowance ($20,000) to the bad debt expense ($18,000), resulting in $38,000.

Sudan Ltd'S Allowance for Doubtful Accounts Was $85,000 at the End