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Smithson Corporation had a 1/1/20 balance in the Allowance for Doubtful Accounts of $30,000
Smithson Corporation had a 1/1/20 balance in the Allowance for Doubtful Accounts of $30,000. During 2020, it wrote off $21,600 of accounts and collected $6,300 on accounts previously written off. The balance in Accounts Receivable was $600,000 at 1/1 and $720,000 at 12/31. At 12/31/20, Smithson estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 20207 a. $6,000 b. $21,300 c. $27,600 d. $36,000 Black Corporation had a 1/1/20 balance in the Allowance for Doubtful Accounts of $21,000. During 2020, it wrote off $15,120 of accounts and collected $4,410 on accounts previously written off. The balance in Accounts Receivable was $420,000 at 1/1 and $504,000 at 12/31. At 12/31/20, Black estimates that 5% of accounts receivable will prove to be uncollectible. What should Black report as its Allowance for Doubtful Accounts at 12/31/20? a $10,080 b. $10,290 c. $14,490 d. $25,200
Expert Solution
| Particulars | $ |
| Allowance for doubtful debts closing balance | $ 36,000 |
| Add Bad debts W/O | $ 21,600 |
| Less Bad debts collected | $ (6,300) |
| Less Allowance for doubtful debts Opening balance | $ (30,000) |
| Bad debts expenses | $ 21,300 |
Hence, Option B is correct.
13)
| Particulars | $ |
| Accounts receivable balance as on 12/31 | $ 504,000 |
| Estimates for uncollectibles |
5% of accounts receivable balance |
| Allowance for doubtful debts closing balance ($504,000 X 5%) |
$ 25,200 |
Hence option D is correct.
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