On December 31,2018,Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $53,600 and $1,325,respectively.During 2019,Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31,2019.Bad debt expense for 2019 would be:

Question

Quizplus · Accepted Answer

Bad debt expense is equal to the amount of accounts written off plus the change in the allowance for uncollectible accounts. In this case, written off accounts were $1,465 and the change in allowance was from $1,325 to $1,280 (an increase of $45). Therefore, bad debt expense for 2019 would be $1,465 + $45 = $1,420. Option A is incorrect as $1,280 is only the allowance for uncollectible accounts and not the bad debt expense for the year. Option B is incorrect as it only represents the amount of accounts that were written off but does not include the change in the allowance.

On December 31,2018,Larry's Used Cars Had Balances in Accounts Receivable