On December 31, 2021, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $42,000 and $1,150, respectively. During 2022, Coolwear wrote off $900 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,400 at December 31, 2022. Bad debt expense for 2022 would be:

$5,150  

Explanation:

Allowance for doubtful debts-opening       A  $1,150

Allowance for doubtful debts-closing       B    $5,400

                                                               C=B-A  $4,250

Bad Debts Written Off                            D            $900

Bad Debt Expense for the year 2022    E=C+D     $5,150

$5,150

Explanation:

Bad debts expense are expenses which are uncollectible and this often occur in a case where a company or organisation delivered their goods or services on credit in which the customer fails to pay the amount owed due to the customer inability to fulfill his /her financial obligations which is why BAD DEBT EXPENSES is often recorded and accounted for whenever a company or organisation prepares their financial statements or book of account.

Coolwear Inc.

Balances in Accounts Receivable and

Coolwear wrote off in accounts receivable $900

Allowance for Uncollectible Accounts of $1,150

Allowance for uncollectible accounts of $5,400

$900-$1,150+$5,400 =$5,150

Therefore Bad debt expense for 2022 would be $5,150

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the correct answer is b.)