Response to the following problem:
The following information is taken from the records of Salzl Corp. at its December 31 year-end:
Accounts written off 2016 2017
During 2016 $2,400
During 2017 $1,000
Recovery of accounts written off Recovered in 2017 300
Allowance for doubtful accounts (adjusted balance)
At December 31, 2015 8,000
At December 31, 2016 9,000
Salzl had always estimated its uncollectible accounts at two per cent of sales. However, because of large discrepancies between the estimated and actual amounts, Hilroy decided to estimate its December 31, 2016 uncollectible accounts by preparing an ageing of its accounts receivable. An amount of $10,000 was considered uncollectible at December 31, 2017.
Required:
1. Calculate the amount of bad debt expense for 2016.
2. Calculate the amount of bad debt expense for 2017.