Question

please help

The following is a portion of the current assets section of the balance sheets of Avanti's, Inc., at December 31, 2020 and 2019: 12/31/20 12/31/19 Accounts receivable, less allowance for bad debts of $9,887 and $17,439, respectively $173,948 $239,842 Required: a. If $11,722 of accounts receivable were written off during 2020, what was the amount of bad debts expense recognized for the year? (Hint Use a T-account model of the Allowance account, plug in the three amounts that you know, and solve for the unknown) Bad debt xpemse b. The December 31, 2020, Allowance account balance includes $3,094 for a past due account that is not likely to be collected. This account has not been written off (1) If it had been written off, will there be any effect of the write-off on the working capital at December 31, 2020? Yes

Answer 1

Ans. A	Bad debt expenses =   Ending balance of allowance account + Write offs - Beginning balance of allowance account
		$11,722 + 9,887 - $17,439
		$4,170
	Allowance for bad debt accounts
	Particulars	Amount	Particulars	Amount
	Write offs	$11,722	By balance b/d (beginning)	$17,439
	To balance c/d (ending)	$9,887	Bad debt expense (bal. fig.)	$4,170
		$21,609		$21,609
Ans. B 1	No, There would no any effect of the write offs on the working capital because the write offs
	entry decreases both accounts (Accounts receivables and allowance for doubtful debts)
	So the working capital remain same because current assets (accounts receivable) and current
	liabilties (allowance for doubtful accounts) are equally affected (decreased).