Castle Company provides estimates for its uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $17,380 at the beginning of 2021 and a $22,610 credit balance at the end of 2021 (after adjusting entries). If the direct write-off method had been used to account for uncollectible accounts (bad debt expense equals actual write-offs), the income statement for 2021 would have included bad debt expense of $17,300 and revenue of $2,400 from the collection of previously written off bad debts. Required: Determine bad debt expense for 2016 according to the allowance method.

$4,560

Explanation:

Given that,

Bad debt expense from previous written off = $17,300

Ending balance (credit balance at the end) = $22,610

Accounts receivable (credit balance at the beginning) = $17,380

Revenue from the collection of previously written off bad debts = $2,400

Bad debt expense for 2021:

= Bad debt expense from previous written off + Ending balance (credit balance at the end) - Accounts receivable (credit balance at the beginning) - Revenue from the collection of previously written off bad debts

= $17,300 + $22,610 - $17,380 - $2,400

= $4,560

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