At the beginning of the year, accounts receivable were $45,000 and the allowance for bad debts was $4,200.During the year, sales (all on account)were $180,000, cash collections were $165,000, bad debts expense totaled $3,100, and $2,600 of accounts receivable were written off as bad debts. The balance at the end of the year for the Allowance for Bad Debts account was:
A)$1,600.
B)$3,700.
C)$4,700.
D)$7,300.

Question

Quizplus · Accepted Answer

The balance in the Allowance for Bad Debts account is increased by the amount of bad debts expense and decreased by the amount of accounts receivable written off. The beginning balance is $4,200, bad debts expense is $3,100, and accounts receivable written off is $2,600. Therefore, the ending balance is $4,200 + $3,100 - $2,600 = $4,700.

At the Beginning of the Year, Accounts Receivable Were $45,000