During 2016, LittleMe Inc. recorded bad debt expense of $8,000 and wrote off an uncollectible account receivable amounting to $10,000. No previously written-off accounts were collected. Assuming January 1, 2016, the allowance for doubtful accounts had a credit balance as $12,000, the December 31, 2016 balance in the allowance account would be A) $20,000. B) $22,000. C) $10,000. D) $ 6,000. E) None of the above is correct

Question

Natalee

Business

20 August, 20:05

During 2016, LittleMe Inc. recorded bad debt expense of $8,000 and wrote off an uncollectible account receivable amounting to $10,000. No previously written-off accounts were collected. Assuming January 1, 2016, the allowance for doubtful accounts had a credit balance as $12,000, the December 31, 2016 balance in the allowance account would be A) $20,000. B) $22,000. C) $10,000. D) $ 6,000. E) None of the above is correct

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Answers (1)

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King · Answer 1

C) $10,000

Explanation:

We know that,

Ending balance of Allowance for Uncollectible Accounts = Beginning balance of Allowance for Uncollectible Accounts + 2016 bad debts - 2016 write off amount

= $12,000 + $8,000 - $10,000

= $10,000

Simply we added the bad debts and deduct the write off balance to the beginning balance of allowance for doubtful account so that the correct amount can come