Question

Wheeling Inc. uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $6,600. At the end of the year, the balance of Accounts Receivable is $116,000 and the unadjusted debit balance of the Allowance for Doubtful Accounts is $820. Credit sales during the year totaled $182,000. What is the estimated Bad Debt Expense for the current year?A) $8,920.B) $5,780.C) $7,420.D) $6,600.

Answer 1

Answer:

option (C) $7,420

Explanation:

Data provided in the question:

Estimate of uncollectible receivables = $6,600

Balance of Accounts Receivable = $116,000

unadjusted debit balance of the Allowance for Doubtful Accounts = $820

Credit sales during the year = $182,000

Now,

Bad debt Expenses is given as:

= Unadjusted debit balance for doubtful accounts + Uncollectible Receivable

= $820 + $6,600

= $7,420

Hence,

The correct answer is option (C) $7,420