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16 July, 15:16

The annual report for Fallon Holding Corporation contained the following information: (in millions) 2016 2015 Accounts Receivable $ 671 $ 733 Allowance for Doubtful Accounts 31 32 Accounts Receivable, Net $ 640 $ 701 Assume that accounts receivable write-offs amounted to $12 during 2016 and $2 during 2015, and that Fallon did not record any recoveries. Required: Determine the Bad Debt Expense for 2016 based on the above facts. (Enter your answer in millions.)

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  1. 16 July, 15:41
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    bad debt expense for the year 2016: 11

    Explanation:

    We can solve for bad debt expense doing the following

    beginning allowance

    - write-off accounts

    + bad debt expense

    Equals to ending allowance

    We plug our values:

    2016 Beginning allowance 32

    (Ending 2015)

    write-off (12)

    bad debt expense?

    2016 Ending allowance 31

    And solve for bad debt expense:

    Bad debt expense = 12 + 31 - 32 = 11
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