Question

In: Accounting

Clark Company estimated the net realizable value of its accounts receivable as of December 31, 2019,...

Clark Company estimated the net realizable value of its accounts receivable as of December 31, 2019, to be $175,000, based on an aging schedule of accounts receivable. Clark has also provided the following information:

The allowance for doubtful accounts balance on January 1, 2019 was $17,000.

The accounts receivable balance on December 31, 2019 was $187,000.

Uncollectible accounts receivable written off during 2019 totaled $13,000.

How much is Clark's 2019 bad debt expense?

A. 8,000

B. 16,000

C. 12,000

D. 4,000

Expert Solution

Accounts receivable balance on December 31, 2019 = $187,000

Net realizable value of accounts receivable as of December 31, 2019 = $175,000

Allowance for doubtful accounts balance on December 31, 2019 = Accounts receivable balance on December 31, 2019 - Net realizable value of accounts receivable as of December 31, 2019

= 187,000 - 175,000

= $12,000

Allowance for doubtful accounts balance on January 1, 2019 = $17,000

Uncollectible accounts receivable written off during 2019 = $13,000

Unadjusted Allowance for doubtful accounts balance on December 31, 2019 = Allowance for doubtful accounts balance on January 1, 2019 - Uncollectible accounts receivable written off during 2019

= 17,000 - 13,000

= $4,000

Bad debt expense = Allowance for doubtful accounts balance on December 31, 2019 - Unadjusted Allowance for doubtful accounts balance on December 31, 2019

= 12,000 - 4,000

= $8,000

Correct option is (A)

ekkarill92 answered 1 year ago

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