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Bad Debt Expense in Producing Coffee

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A company producing coffee began the year with an allowance for Bad Debts at $22,000.

During the year, $25,000 of accounts receivable were written off.

The adjusted balance in allowance for Bad Debts on the end-of-year balance sheet was $27,000.

Question: What is the amount of bad debt expense for the year?

Please explain answer in detail.

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This solution contains step-by-step instructions to illustrate the allowance for doubtful debts account and determines the amount of bad debt expense for the year with complete justifications.

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Allowance for Doubtful Debts Account

(a) Allowance for Doubtful Accounts-Beginning balance $22000
(b) Less: Accounts receivable written off during the year $25000
(c) Balance left (Dr) before year-end adjustments
(a-b) (3000)
(e) Bad Debts Expenses for the year estimated 30000
(d) Adjusted balance of Allowance for doubtful account
at the end of year- Credit balance (e-c) $27000

Note: In ...

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