Question

View FUNS) 1 Check my work The following is a portion of the current assets section of the balance sheets of Avanti's, Inc., at December 31, 2020 and 2019 Accounts receivable, less allowance for bad debts of $9,895 and $16,489, respectively 12/31/20 $177,232 12/31/19 $236,021 Required: a. If $11.720 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 expense b. The December 31, 2020, Allowance account balance includes $3,020 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, 20207 Yes No < Prey, 7 of 12 !! Next >

Answer 1

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Avanti's Inc.
Answer a
Allowance for Bad debts account
Date	Account	Debit $	Date	Account	Credit $
	Accounts Receivable	11,720.00		Opening Balance	16,489.00
	Closing Balance	9,895.00		Bad Debt Expense	5,126.00	This is balancing figure.
		21,615.00			21,615.00	-
So Bad Debt Expense for 2020 is $ 5,126.

Answer b

Accounts receivable is shown in balance sheet and allowance is deducted from the balance. So if a past due balance is written off it will not affect the net balance of accounts receivable as allowance was already created. So there will be no effect on working capital.