On June 2, 2019, Harold's TV Sales sold Richard a large HD TV, on account, for $12,000. Harold's TV Sales uses the accrual method. In 2020, when the balance on the account was $8,000, Richard filed for bankruptcy. Harold was notified that he could expect to receive 60 cents on the dollar of the amount owed to him. In 2021, final settlement was made and Harold received $5,000. How much bad debt loss can Harold deduct and in which year (s) ?

Question

Roger Walter

Business

12 May, 23:29

On June 2, 2019, Harold's TV Sales sold Richard a large HD TV, on account, for $12,000. Harold's TV Sales uses the accrual method. In 2020, when the balance on the account was $8,000, Richard filed for bankruptcy. Harold was notified that he could expect to receive 60 cents on the dollar of the amount owed to him. In 2021, final settlement was made and Harold received $5,000. How much bad debt loss can Harold deduct and in which year (s) ?

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Answers (1)

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Pittman · Answer 1

Bad debt loss $8.000 * *

Explanation:

In the given case, it is referred to as a business debt and therefore it is possible to recognize partial worthlessness in 2017. The maximum amount of bad debt loss that Fred can deduct in 2017 is $8000.