Problem
Julie is the owner of a sole proprietorship. She operates an event planning service. Julie chose the accrual method of accounting. She has the following uncollected invoices:
|
Invoice Number
|
Year Services Were Performed
|
Amount Owed
|
Amount Paid
|
|
121934
|
2018
|
$8,500
|
$0
|
|
122008
|
2018
|
$10,000
|
$2,500
|
|
122674
|
2018
|
$2,500
|
$500
|
|
130091
|
2019
|
$15,000
|
$0
|
Julie has no hope of collecting the first two invoices. She is currently collecting on the third debt through payment plans. The work for the last invoice has not been completed in full. What is Julie's allowable deduction in the current year for the business bad debt?