Bender Ltd uses the allowance method of accounting for bad and doubtful debts. Their accounts show:
$$\begin{array}{l}
\begin{array} { l r }
\text { Sales } & \$ 140000 \
\text { Accounts receivable balance } 1 \text { July } 18 & 20000 \
\text { Accounts receivable balance 30 June } 19 & 28000 \
\text { Bad debts written off * } & 3000 \
\text { Discount allowed } & 9000
\end{array}\
\text { [*] The direct write-off method is used. }
\end{array}$$
The amount of bad debts actually written off during the year is:

Question

Bender Ltd uses the allowance method of accounting for bad and doubtful debts. Their accounts show:
$$\begin{array}{l}
\begin{array} { l r } 
\text { Sales } & \$ 140000 \
\text { Accounts receivable balance } 1 \text { July } 18 & 20000 \
\text { Accounts receivable balance 30 June } 19 & 28000 \
\text { Bad debts written off * } & 3000 \
\text { Discount allowed } & 9000
\end{array}\
\text { [*] The direct write-off method is used. }
\end{array}$$
The amount of bad debts actually written off during the year is:

Quizplus · Accepted Answer

The amount of bad debts actually written off during the year is calculated by adjusting the opening and closing balances of accounts receivable for sales and discounts allowed. The calculation is as follows: Opening balance + Sales - Closing balance - Discounts allowed = Bad debts written off. Therefore, $20,000 + $140,000 - $28,000 - $9,000 = $123,000 - $28,000 = $95,000 - $9,000 = $86,000. However, the correct calculation for bad debts written off should directly use the given figure for bad debts written off, which is $3,000, indicating a mistake in the extended calculation. The correct approach focuses on the information directly related to bad debts, not recalculating accounts receivable adjustments.

Bender Ltd Uses the Allowance Method of Accounting for Bad