At the Beginning of 2010, Cyrus Corp

question 9

Essay

At the beginning of 2010, Cyrus Corp.'s allowance for doubtful accounts is $12,500.
During 2010, $4,250 was written off as uncollectible. At December 31, the company used an aging schedule of accounts receivable and determined that $10,530 of the accounts receivable would probably be uncollectible. What would be the bad debts expense that should be reported on Cyrus's 2010 income statement?
a. $5,720
b. $26,780
c. $2,280
d.$18,280

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Definitions:

Aging Analysis

A method to evaluate and categorize accounts receivable based on the length of time an invoice has been outstanding to manage and estimate financial health.

Allowance for Doubtful Accounts

An estimate made by a company to account for receivables that may not be collected due to credit risk.

Bad Debt Expense

An expense reported on the income statement, representing the amount of receivables a company does not expect to collect.

Allowance for Doubtful Accounts

A contra-asset account that represents an estimate of the amount of accounts receivable which may not be collected, reducing the gross amount of receivables reported on the balance sheet.