Samuda Enterprises uses the aging approach to estimate bad debt expense. At the end of 2011, Samuda reported a balance in accounts receivable of $620,000 and estimated that $12,400 of its accounts receivable would likely be uncollectible. The allowance for doubtful accounts has a $1,500 debit balance at year-end (that is, more was written off during the year than the balance in the account).

1. What amount of bad debt expense should be recorded for 2011?

2. What amount will be reported on the 2011 balance sheet for accounts receivable?

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Originally Posted by askmei321

Samuda Enterprises uses the aging approach to estimate bad debt expense. At the end of 2011, Samuda reported a balance in accounts receivable of $620,000 and estimated that $12,400 of its accounts receivable would likely be uncollectible. The allowance for doubtful accounts has a $1,500 debit balance at year-end (that is, more was written off during the year than the balance in the account).

1. What amount of bad debt expense should be recorded for 2011?

2. What amount will be reported on the 2011 balance sheet for accounts receivable?

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I would say something around $30,000 as the expense with the accounts receivable balance being offset accordingly

The principle here is that all known bad debts will be accounted for and sufficient allowance made for those items which are not yet apparent