The following is a portion of the current assets section of the balance sheets of Avanti?s, Inc., at December 31, 2020 and 2019:?

Required:

a. If $10,800 of accounts receivable were written off during 2020, what was the amount of bad debts expense recognized for the year? (Hint: Use a T-account model of the Allowance account, plug in the three amounts that you know, and solve for the unknown.)

b. The December 31, 2020, Allowance account balance includes $2,800 for a past due account that is not likely to be collected. This account has not been written off. If it had been written off, what would have been the effect of the write-off on:

1. Working capital at December 31, 2020?

2. Net income and ROI for the year ended December 31, 2020?

c. What do you suppose was the level of Avanti?s sales in 2020, compared to 2019? Explain your answer.

Transcribed Image Text:

12/31/19 12/31/20 Accounts receivable, less allowance for bad of $9,100 and $11,600, respectively debts $226,700 $193,400