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Metlock Company had a 1/1/20 balance in the Allowance for Doubtful Accounts of $43500. During 2020,...

Metlock Company had a 1/1/20 balance in the Allowance for Doubtful Accounts of $43500. During 2020, it wrote off $29000 of accounts and collected $8600 on accounts previously written off. The balance in Accounts Receivable was $820000 at 1/1 and $920000 at 12/31. At 12/31/20, Metlock estimates that 6% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 2020?

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Answer #1

Accounts receivable 12/31/20 = $920,000

Estimated uncollectibles = 6%

Allowance for Doubtful Accounts
Accounts receivable 29,000 Beginning balance 43,500
Accounts receivable 8,600
Ending balance 23,100

Allowance for doubtful accounts, existing = $23,100

Bad debts expense = ( Accounts receivable 12/31/20 x Percentage estimated as uncollectibles) -   Allowance for doubtful accounts, existing

= 920,000 x 6% - 23,100

= 55,200-23,100

= $32,100

Kindly comment if you need further assistance. Thanks

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