Question

"Quill Industries uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $35,500. The unadjusted credit balance in the Allowance for Doubtful Accounts account is $12,200 What is the estimated Bad Debt Expense for the period?"

Answer 1

Answer:

$23,300

Explanation:

Bad debt Expense will be calculated using the account receivable method. The expense is calculated using the account receivable aging analysis.

Closing Value of the Allowance for Doubtful Accounts will be as follow

As Allowance for Doubtful Accounts already have Credit balance of $12,200, we need to adjust the remainder to make the closing credit balance of Allowance for Doubtful Accounts $35,500 at the year end.

Adjustment Value = $35,500 + $12,200 = $23,300

This Expense will be recorded as follow

Dr.   Bad Debt Expense                         $23,300

Cr.   Allowance for Doubtful Accounts $23,300