At the Beginning of 2010, Flagstaff Corp

question 41

Essay

At the beginning of 2010, Flagstaff Corp.'s allowance for doubtful accounts is $10,000. During 2010, $7,000 was written off as uncollectible. At December 31, the company used an aging schedule of accounts receivable and determined that $8,000 of the accounts receivable would probably be uncollectible. Calculate bad debts expense to be reported on Flagstaff's 2010 income statement.

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Definitions:

Accounts Receivable

Receivables from clients for goods delivered or services performed by a company, awaiting payment.

Allowance Method

An accounting technique used to estimate and deduct bad debts from accounts receivable.

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered but not yet paid for.

Bankrupt

A legal status of a person or entity that cannot repay the debts it owes to creditors.