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How much is bad debts expense for the year ended December

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Question - SI Company has the following data relating to accounts receivable for the year ended December 31, 2019:

Accounts receivable, January 1 425,000

Allowance for bad debts debit balance, January 1 20,000

Sales during the year 60% on account, terms: 10/10,5/15, n/30 and 40% cash sales 4,000,000

Cash received from customers during the year excluding cash sales 2,000,000

Accounts written off during the year 15,000

Sales returns and allowances 50,000

An analysis of cash received from customers during the year revealed that 13.5% was received from customers availing the 10-day discount period, 23.75% was received from customers availing the 15-day discount period, 20,000 represented recovery of accounts written-off, and the balance was received from customers paying beyond the discount period.

Si company's year- end balance of allowance for bad debts was estimated to be 10% of the outstanding accounts receivable as at December 31,2019 based on the aging of accounts.

REQUIRED -

1. What is the accounts receivable balance at December 31, 2019?

2. How much is the required balance of allowance for bad debts at December 31, 2019?

3. How much is the bad debts expense for the year ended December 31, 2019?

Reference no: EM132832162

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