At the beginning of 2017,Elixir,Inc.has the following account balances:

Bad Debts Expense $0
During the year,credit sales amounted to $800,000.Cash collected on credit sales amounted to $770,000,and $18,000 has been written off.At the end of the year,the company adjusted for bad debts expense using the percent-of-sales method and applied a rate,based on past history,of 2.5%.The ending balance in the Allowance for Bad Debts is ________.

Question

At the beginning of 2017,Elixir,Inc.has the following account balances:

Bad Debts Expense $0
During the year,credit sales amounted to $800,000.Cash collected on credit sales amounted to $770,000,and $18,000 has been written off.At the end of the year,the company adjusted for bad debts expense using the percent-of-sales method and applied a rate,based on past history,of 2.5%.The ending balance in the Allowance for Bad Debts is ________.

Quizplus · Accepted Answer

D)Ending balance in the Allowance account = Beginning balance of Allowance for Bad Debts - Write offs + Bad Debt Expense for the year = $7,000 - $18,000 + $20,000 = $9,000

At the Beginning of 2017,Elixir,Inc