Accounts Receivable $1,630,200 $1,280,920 Allowance for Doubtful Accounts (86,000) (70,900) Accounts Receivable, Net $1,544,200 $1,210,020 Assume the company recorded no write-offs or recoveries during 2016. What was the amount of Bad Debt Expense reported in 2016

Year 2016. 2015

Accounts Receivable $1,630,200 $1,280,920

Allowance for Doubtful Accounts ($86,000) ($70,900)

Accounts Receivable Net $1,544,200 $1,210,020

Assume the company recorded no write-offs or recoveries during 2016. What was the amount of Bad Debt Expense reported in 2016

Answer:

The answer is $86,000.

Explanation:

Most companies sell their products on credit, for the convenience of the buyers and to increase their own sales volume. The term bad debt refers to outstanding debt that a company considers to be non-collectible after making a reasonable amount of attempts to collect. These debts are worthless to the company and are written off as an expense.

Bad debts expense is also referred to as uncollectible accounts expense or doubtful accounts expense.

From the question, it is clear that the Bad Debts is recorded using the Allowance Method.

Some people will use these terms or account titles interchangeably: Bad Debt Expense, Doubtful Account Expense, Uncollectible Account Expense ... (Generally, the Allowance account will have a credit balance-whereas Accounts Receivable and other asset accounts normally have debit balances.)

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