Castle Company provides estimates for its uncollectible accounts. The allowance for uncollectible accounts had acredit balance of $17,280 at the beginning of 2018 and a $22,410 credit balance at the end of 2018 (after adjusting entries). If the direct write-off method had been used to account for uncollectible accounts (bad debt expenseequals actual write-offs), the income statement for 2018 would have included bad debt expense of $17,100 andrevenue of $2,200 from the collection of previously written off bad debts.Required:Determine bad debt expense for 2018 according to the allowance method.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Castle Company provides estimates for its uncollectible accounts. The allowance for uncollectible accounts had a
credit balance of $17,280 at the beginning of 2018 and a $22,410 credit balance at the end of 2018 (after
equals actual write-offs), the income statement for 2018 would have included bad debt expense of $17,100 and
revenue of $2,200 from the collection of previously written off
Required:
Determine bad debt expense for 2018 according to the allowance method.
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