Answer:
Bad Debts expense is $ 64,000
Explanation:
Computation of Bad Debts expense
Receivable balance at end of year $ 400,000
Estimated uncollectible accounts 10 %
Balance of Uncollectible accounts ( $ 400,000 * 10 %) $ 40,000
Existing balance in allowance for uncollectible accounts
Opening balance $ (36,000)
Less: Receivables written off <u>$ 60,000</u>
Balance of allowance account before adjustment $ 24,000
Required balance is <u>$( 40,000)</u>
Adjustment entry required for bad debts $ 64,000