Labrador Inc. has the following information available for the current year: Net Sales $750,000 Bad Debt Expense 60,000 Accounts Receivable, Beginning of Year 120,000 Accounts Receivable, End of Year 55,000 Allowance For Doubtful Accounts, Beginning of Year 42,000 Allowance For Doubtful Accounts, End of Year 62,000 What was the amount of write-offs during the year

Question

Cordell Grimes

Business

10 March, 00:06

Labrador Inc. has the following information available for the current year: Net Sales $750,000 Bad Debt Expense 60,000 Accounts Receivable, Beginning of Year 120,000 Accounts Receivable, End of Year 55,000 Allowance For Doubtful Accounts, Beginning of Year 42,000 Allowance For Doubtful Accounts, End of Year 62,000 What was the amount of write-offs during the year

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Lance Bird · Answer 1

Answer:$40,000

Explanation:

Bad debt expense is referred to as the noncollectable accounts receivables in a company. Allowance for doubtful accounts is made by Labrador Inc as the company is sure that the goods sold in credit will not be received by the company. The amount which has to be written in the year is the amount which cannot be recovered by the firm. The opening and closing balance of the allowances have to be adjusted in the bad debt expense to find out the final amount to be written off in the balance sheet from accounts receivable.

Bad debt expense $60000

(Add) Opening balance

Allowance for doubtful accounts $42000

(Less) Closing balance

Allowance for doubtful accounts $62000

Total write off during the year $40000