Question

Manley operates a law practice on the accrual method and calendar year. At the beginning of the year Manley's firm had an allowance for doubtful accounts with a balance of $15,000. At the end of the year, Manley recorded bad debt expense of $23,000 and the balance of doubtful accounts had increased to $18,000. What is Manley's deduction for bad debt expense this year?

a. $23,00
b. $3,000
c. $26,000
d. $5,000
e. $20,000

Answer 1

e. $20,000

Step-by-step explanation:

The computation of the manley deduction for the bad debt expense is shown below:

= Allowance for doubtful debts + bad debt expense - increased in the balance of doubtful debts

= $15,000 + $23,000 - $18,000

= $38,000 - $18,000

= $20,000

hence, the deduction of Manley for the bad debt expense is $20,000

Therefore the correct option is e.

We simply applied the above formula so that the correct value could come

And, the same is to be considered