Answer:
Allegheny will report $5,800 as Uncollectible Accounts Expense on its Year 2 income statement.
Explanation:
Bad debt Expense will be calculated using the percentage of debt loss. The expense will be calculated using the account receivable balance.
Allowance for Doubtful Accounts is estimated as $4,000 for year 2
Before Adjustment year 2
Allowance for Doubtful Accounts Balance = $2,400 credit - $4,200 = $1,800 debit
Account receivable balance = $54,000 - $4,200 = $49,800
As Allowance for Doubtful Accounts already have debit balance of $1,800, we need to adjust the remainder to make the closing balance of Allowance for Doubtful Accounts $4,000 at the year end.
Adjustment Value = $4,000 + $1,800 = $5,800
