The following information is from the 2016 records of Armadillo Camera Shop: $$\begin{array} { | l | r | }
\hline \text { Accounts receivable, 31 December 2016 } & \$ 20000 \text { (debit) } \
\hline \text { Net credit sales for 2016 } & 95000 \
\hline \text { Accounts written off as uncollectable during 2016 } & 7000 \
\hline \text { Cash sales during 2016 } & 27000 \
\hline
\end{array}$$ Bad debts expense is determined by the direct write-off method.Which of the following will be the amount of Bad debts expense?
A)$2 250
B)$2 850
C)$3 450
D)$7 000

Question

The following information is from the 2016 records of Armadillo Camera Shop: $$\begin{array} { | l | r | } 
\hline \text { Accounts receivable, 31 December 2016 } & \$ 20000 \text { (debit) } \
\hline \text { Net credit sales for 2016 } & 95000 \
\hline \text { Accounts written off as uncollectable during 2016 } & 7000 \
\hline \text { Cash sales during 2016 } & 27000 \
\hline
\end{array}$$ Bad debts expense is determined by the direct write-off method.Which of the following will be the amount of Bad debts expense?
A)$2 250
B)$2 850
C)$3 450
D)$7 000

Quizplus · Accepted Answer

Under the direct write-off method, bad debts expense is recognized when specific accounts are deemed uncollectable and written off. Therefore, the bad debts expense for 2016 is the total amount of accounts written off, which is $7,000.

The Following Information Is from the 2016 Records of Armadillo