Pauline Company estimates the allowance for doubtful accounts by aging its accounts receivable. At the end of 2021, the balance in the allowance account was $50,000. During 2022, the company wrote off $5,000 in bad debts and collected a $3,000 receivable that had been previously written off as uncollectable. At the end of 2022, the aging schedule indicated that the balance of the allowance for doubtful accounts should be $64,000. What is the bad debts expense for 2022?

Question

Quizplus · Accepted Answer

The bad debts expense for 2022 is calculated as follows: Start with the desired ending balance of $64,000, add the $5,000 written off, subtract the $3,000 recovery, and subtract the beginning balance of $50,000. This results in a bad debts expense of $16,000.

Pauline Company Estimates the Allowance for Doubtful Accounts by Aging