At the beginning of 2019, Gourmet Cupcakes, Inc. has the following ledger balances: Accounts Receivable $42,000 (Debit)
Allowance for Bad Debts $6,000 (Credit)
During the year, credit sales amounted to $840,000. Cash collected on credit sales amounted to $750,000, and $17,000 has been written off. Gourmet Cupcakes uses the aging-of-receivables method to record bad debts expense. The estimate of uncollectible accounts was $28,000. The ending balance in the Allowance for Bad Debts is ________.

Question

Quizplus · Accepted Answer

First, we need to calculate the total amount of bad debt expense for the year:
- Beginning balance of allowance for bad debts: $6,000 (credit)
- Add estimated uncollectible accounts: $28,000 (debit)
- Deduct amount written off: $17,000 (credit)
- Bad debt expense for the year: $17,000 + $28,000 - $6,000 = $39,000 (debit)

Next, we need to calculate the ending balance of allowance for bad debts:
- Beginning balance of allowance for bad debts: $6,000 (credit)
- Add bad debt expense for the year: $39,000 (debit)
- Ending balance of allowance for bad debts: $33,000 (credit)

Therefore, the correct answer is C, $28,000.

At the Beginning of 2019, Gourmet Cupcakes, Inc