In the balance sheet at the end of its first year of operations, Dinty Inc. reported an allowance for uncollectible accounts of $82,000. During the year, Dinty wrote off $31,800 of accounts receivable it had attempted to collect and failed. Credit sales for the year were $2,340,000, and cash collections from credit customers totaled $1,910,000. What bad debt expense would Dinty report in its first-year income statement? 1.$82,000.2. $50,200. 3.$113,800.

The correct option is 2. $50,200

Explanation:

Please see below the required journals for the transactions that occurred:

Debit Allowance for doubtful accounts             $31,800

Credit Accounts receivable                                $31,800

(To record write-off of accounts receivable)

Debit Accounts receivable                           $2,340,000

Credit Sales revenue                                    $2,340,000

(To record credit sales during the year)

Debit Cash                                                      $1,910,000

Credit Accounts receivable                           $1,910,000

(To record collection on account)

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