Gamma Corporation had a balance in its Allowance for Doubtful Accounts of $30,000 at January 1, 2020 for Accounts Receivable of $600,000. During the year, Gamma wrote off $21,600 of accounts receivable and collected $6,300 on accounts previously written off. The balance in Accounts Receivable at December 31, 2020, was $720,000. At year-end, Gamma estimate that 5% of Accounts Receivable will be uncollectible. What is the amount of bad debt expense Gamma Corporation will recognize for 2020? O $6,000 $9,300 O $21,300
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.
jaydip
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
