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22 February, 03:49

On December 31, 2010, Larry's Used Cars had balances in its accounts receivable and allowance for uncollectible accounts of $53,600 and $1,325 respectively. During 2011, Larry's wrote off $1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $1,280 at December 31, 2011. Bad debt expense for 2011 would be:

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  1. 22 February, 06:22
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    Bad debt expense for 2011 would be: $1,420

    Explanation:

    On December 31, 2010, Larry's Used Cars had balance in its allowance for uncollectible accounts of $1,325.

    During 2011, Larry's wrote off $1,465 in accounts receivable by the journal entry:

    Debit Allowance for uncollectible accounts $1,465

    Credit Accounts receivable $1,465

    At December 31, 2011, before adjusting, the Allowance for uncollectible accounts had debit balance of $140 ($1,465 - $1,325 = $140)

    Larry's Used Cars determined that there should be an allowance for uncollectible accounts of $1,280 at December 31, 2011.

    Bad debt expense for 2011 = $1,280 + $140 = $1,420
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