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In the balance sheet at the end of its first year of operations, Dinty Inc. reported an allowance for uncollectible accounts of $82,000. During the year, Dinty wrote off $32,000 of accounts receivable it had attempted to collect and failed. Credit sales for the year were $2,200,000, and cash collections from credit customers totaled $1,950,000. What bad debt expense would Dinty report in its first-year income statement?

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eugeniawatanabe

Answer:

Bad debt expense: 114,000

Explanation:

Dinty Inc. during the year canceled the accounts receivable it had attempted to collect and failed for $ 32,000 and reported a provision for bad accounts of $ 82,000. Both operations have to be registered against "Bad debt expenses" because they represent accounts receivable that are presumed to be without recoverable value.

Bad debt expense   114,000

Accounts receivables            32,000  

Provision for bad accounts           82,000

                   114,000   114,000

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