Chapter 7, Problem 7.12E

Uncollectible accounts; allowance method and direct write-off method compared; solving for unknown

• LO7–6

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 adjusting entries). If the direct write-off method had been used to account for uncollectible accounts (bad debt expense 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 bad debts.

Required:

Determine bad debt expense for 2018 according to the allowance method.