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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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On January 1, 2019, King Company’s Allowance for Doubtful Accounts had a credit balance of $15,000. During 2019, King (1) charged $32,000 to bad debt expense, (2) wrote off $23,000 of uncollectible accounts receivable, and (3) unexpectedly recovered $6,000 of bad debts written off in the prior year. The Allowance for Doubtful Accounts balance at December 31, 2019, should be:

  1. a. $47,000
  2. b. $32,000
  3. c. $30,000
  4. d. $24,000

To determine

Identify the allowance for doubtful debts balance at December 31, 2019.

Explanation

Allowance for Doubtful Accounts:

This is a contra asset account to the Accounts Receivables account that reduces the asset balance, and report the net realizable accounts receivable value on the balance sheet. Allowance for Doubtful Accounts indicates the amount of receivables that are expected to remain uncollectible.

Identify the allowance for doubtful debts balance at December 31, 2019.

Allowance  for doubtful  accounts  at December 31, 2019}=(Allowance for doubtful credit balance+ bad debt expense charged Written off amount ofuncollectible ac

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