The following information is related to December 31, 2013 balances. $\begin{array}{lr}
\text { Accounts receivable } & \$ 2,100,000 \
\text { Allowance for doubtful accounts (credit) } & (180,000) \
\text { Cash realizable value } & \$ 1,920,000
\end{array}$ During 2014 sales on account were $580,000 and collections on account were $344,000. Also during 2014 the company wrote off $32,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $216,000. Bad debt expense for 2014 is
A) $ 68,000.
B) $ 36,000.
C) $216,000.
D) $ 4,000.

Question

Quizplus · Accepted Answer

Bad debt expense is calculated as the required ending balance in the allowance account ($216,000) minus the beginning balance ($180,000) plus write-offs ($32,000), resulting in $68,000.

The Following Information Is Related to December 31, 2013 Balances