An analysis of the Allowance of Doubtful Accounts reveals: Balance, 01/01/17…………
ID: 338389 • Letter: A
Question
An analysis of the Allowance of Doubtful Accounts reveals:
Balance, 01/01/17……………………………………………………… $ 15,682
2017 Transactions—
Provision for bad debts………………………………………………… 3,485
Recoveries on bad debts……………………………………………….. (740)
Accounts written off as uncollectible………………………………….. (1,220)
Balance, 12/31/17……………………………………………… $ 17,207
(Can the Reserve Method be used for Federal income tax purposes? How do we treat “Recoveries”? What amount is deductible in 2017? What amount goes on Schedule M? This will be a good challenge to you.)
Explanation / Answer
An analysis of the Allowance of Doubtful Accounts reveals:
Balance, 01/01/17……………………………………………………… $ 15,682
2017 Transactions—
Provision for bad debts………………………………………………… 3,485
Recoveries on bad debts……………………………………………….. (740)
Accounts written off as uncollectible………………………………….. (1,220)
Balance, 12/31/17……………………………………………… $ 17,207
(Can the Reserve Method be used for Federal income tax purposes? How do we treat “Recoveries”? What amount is deductible in 2017? What amount goes on Schedule M? This will be a good challenge to you.)