Coronado Industries had a 1/1/17 balance in the Allowance for Doubtful Accounts

Question

Coronado Industries had a 1/1/17 balance in the Allowance for Doubtful Accounts of $34000. During 2017, t wrote off $21000 of accounts and collected $6120 on accounts previou written off. The balance in Accounts Receivable was $590000 at 1/1 and $720000 at 12/31. At 1 uncollectible. What is Bad Debt Expense for 2017? at 1/l and $720000 at 12/31. At 12/31/17. Smithson estimates that 7% of accounts receivable will prove to be $ 16400. O $36000. O $37400o. $ 31280. Click if you would like to Show Work for this question:

Explanation / Answer

Bad debt expense is an estimated expense based on the accounts receivable balance. ALl write offs or collections are done only from the allowance for doubtful accounts.

Bad debt expense cumulatively = 720000 * 7% = 50400

However, the allowance for bad debt already has a balance of 34000

Hence bad debt expense = 50400 - 34000 = 16400

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