On January 1, 2017, Everlight Corp
has the following account balances:
Accounts Receivable
20,000
Allowance for Bad Debts
1,200
Bad Debts Expense
During the year, Everlight has $155,000 of credit sales, collections of credit sales of $143,000, and write-offs of $3,300. It records bad debts expense at the end of the year using the aging-of-receivables method. At the end of the year, the aging analysis shows that $1,700 is the estimate of uncollectible accounts. Before the year-end entry to adjust the bad debts expense is made, the balance in the Allowance for Bad Debts expense is ________.
A) a debit of $2,100
B) a credit of $4,500
C) a zero balance
D) a debit of $3,300
A .$3,300 - $1,200 = $2,100
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