Question

At the end of the current year, using the aging of receivable method, management estimated that $28,500 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $800. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Multiple Choice


Accounts Receivable 29,300

Allowance for Doubtful Accounts 29,300

Bad Debts Expense 27,700

Allowance for Doubtful Accounts 27,700

Accounts Receivable 28,500

Bad Debts Expense 800

Sales 29,300

Bad Debts Expense 29,300

Allowance for Doubtful Accounts 29,300

Bad Debts Expense 28,500

Allowance for Doubtful Accounts 28,500

Answer 1

Answer:

Adjusting entry the company made to record its estimated bad debts expense:

Bad Debts Expense 29,300

Allowance for Doubtful Accounts 29,300

Explanation:

The company uses the aging of receivable method to estimate uncollectible.

Estimated uncollectible would be $28,500

Before year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $800

Bad debts expense = $28,500 + $800 = $29,300

Adjusting entry the company made to record its estimated bad debts expense:

Bad Debts Expense 29,300

Allowance for Doubtful Accounts 29,300