May Co. prepared an aging of its accounts receivable at December 31, 2007 and de
ID: 2328595 • Letter: M
Question
May Co. prepared an aging of its accounts receivable at December 31, 2007 and determined that the net realizable value of the receivables was $300,000. Additional information is available as follows:
Allowance for uncollectible accounts at 1/1/07—credit balance:
$ 34,000
Accounts written off as uncollectible during 2007:
23,000
Accounts receivable at 12/31/07:
325,000
Uncollectible accounts recovered during 2007:
5,000
For the year ended December 31, 2007, May's bad debt expense would be
$25,000.
$23,000.
$16,000.
$9,000.
Allowance for uncollectible accounts at 1/1/07—credit balance:
$ 34,000
Accounts written off as uncollectible during 2007:
23,000
Accounts receivable at 12/31/07:
325,000
Uncollectible accounts recovered during 2007:
5,000
Explanation / Answer
Beginning allowance for uncollectible accounts = 34000
Ending allowance for uncollectible accounts = 325000-300000 = 25000
Bad debt expense = 34000+5000-23000-25000 = 9000
So answer is d) $9000