Question

On January 1, 2020, Dollar Department Store had an Accounts Receivable balance of s 2400,000, and an Allowance for Doubtful Accounts in the amount of s 240,000. During the year, Dollar Department Storerecorded Sales (all on account) in the amount of $ 15 ,000,000, made provisions to the Allowance for Doubtful Accounts in the amount of $ 200,000, and wrote off Accounts Receivable in the amount of $ 300,000.Total Cash Collections from Accounts Receivable during the year were $ 15,500,000. There were no collections of previously "written off" accounts.
lf, on their December 31, 2020 Balance Sheet, Dollar Department Store records an Allowance for Doubtful Accounts equal to 10% of their outstanding Accounts Receivable, what is the amount of "Bad Debt Expense" thatDollar Department Store will record during the year ending December 31, 2020?

A.210,000

B.300,000

C.320,000

D.None of the above

Answer 1

--Correct Answer = Option 'D' None of the above, because Bad Debt Expense = $ 220,000

	Beginning Allowance account balance	$240,000
Z	Bad Debt Expense recognised	$200,000
	Written off	($300,000)
A	Unadjusted balance	$140,000
B	Accounts receivables balance on 31 Dec [$2400000 [phone]-$300000 - $ 15500000)	$1,600,000
C	Adjusted balance required in Allowance account ($1600000 x 10%)	$160,000
D = C - A	Additional Bad Debt Expense	$20,000
E = Z + D	Total bad debt expense during the year	$220,000