On January 1, All City Services has the following balances: Accounts Receivable $25,000
Bad Debts Expense $0
All City has the following transactions during January: Credit sales of $120,000, collections of credit sales of $81,000, and write-offs of $18,000. All City uses the direct write-off method. The amount of Bad Debts Expense for January is ________.

Question

Quizplus · Accepted Answer

Under the direct write-off method, Bad Debts Expense is recognized when debts are deemed uncollectible and written off. In January, All City wrote off $18,000, directly impacting Bad Debts Expense by the same amount.

On January 1, All City Services Has the Following Balances