The following information is available for Murphy Company:
Allowance for doubtful accounts at December 31, 2013 $16,000
Credit sales during 2014 800,000
Accounts receivable deemed worthless and written off during 2014 18,000
As a result of a review and aging of accounts receivable in early January 2015, it has been determined that an allowance for doubtful accounts of $11,000 is needed at December 31, 2014. What amount should Murphy record as "bad debt expense" for the year ended December 31, 2014?

$13,000

Explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.  

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debt expense.

If accounts receivable deemed worthless and written off during 2014 was 18,000, this would have been done by

Debit Allowance for doubtful debt  $16,000

Credit Accounts receivable  $16,000

then

Debit Bad debts expense $2,000

Credit Accounts receivable $2,000

Furthermore, if it has been determined that an allowance for doubtful accounts of $11,000 is needed at December 31, 2014, entries required are

Debit Bad debt expense $11,000

Credit Allowance for doubtful debt  $11,000

As such, total entries to bad debts account

= $11,000 + $2,000

= $13,000

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