Determine the bad debt expense for year 2 based on the preceding facts. A recent annual report for RVC contained the following information (dollars in thousands) at the end of its fiscal year:Year 2Year 1Accounts receivableAllowance for doubtful accounts$ 8,626,000(553,000)$ 8,073,0002$9,087,000(1,026,000)$48,061,000A footnote to the financial statements disclosed that uncollectible accounts amounting to $826,000 and $428,000 were written off asbad debts during year 2 and year 1, respectively. Assume that the tax rate for RVC was 40 percent.

Bad debt represents the amount that is not recoverable from the customers of the company.

Answered: Determine the bad debt expense for year…

Business

Accounting

Determine the bad debt expense for year 2 based on the preceding facts

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Determine the bad debt expense for year 2 based on the preceding facts.

A recent annual report for RVC contained the following information (dollars in thousands) at the end of its fiscal year:
Year 2
Year 1
Accounts receivable
Allowance for doubtful accounts
$ 8,626,000
(553,000)
$ 8,073,000
2$
9,087,000
(1,026,000)
$4
8,061,000
A footnote to the financial statements disclosed that uncollectible accounts amounting to $826,000 and $428,000 were written off as
bad debts during year 2 and year 1, respectively. Assume that the tax rate for RVC was 40 percent.

Definition Definition Receivable amount that a company is owed, but did not receive, and which may not be receivable in future.

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