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Let's suppose you own a company. On 12/31/2020, your customers collectively owed you $90 million. However, as you reported on the balance sheet, you were
Let's suppose you own a company. On 12/31/2020, your customers collectively owed you $90 million. However, as you reported on the balance sheet, you were only expecting to collect $75 million in 2021, which implied an allowance of $90M $75M, or $15 million as of 12/31/2020.
Given that the actual write-off was $6 million in 2020, how much was the bad debt expense this year?
a. $20 million
B. $19 million
C. $15 million
D. $11 million
(in $ millions) 12/31/2020 12/31/2019 Accounts receivable (gross) $90 $82 Allowance for credit losses $15 $10 Accounts receivable (net) $75 $72 Write-offs for the year $6 $4Step by Step Solution
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