Question

At the end of its most recent accounting period, Hinch Corporation had a balance of Accounts Receivable of $725,000 and a credit balance in Allowance for Uncollectible Accounts of $4,800. An aging of Accounts Receivable performed at the end of that period determined that the balance in Allowance for Uncollectible Accounts should be $31,400. The adjusting entry to record Bad Debts Expense should include which of the following:
a. Debit to Bad Debts Expense of $26,600
b. Credit to Bad Debts Expense of $31,400
c. Debit to Bad Debts Expense of $36,200
d. Credit to Allowance for Uncollectible Accounts of $31,400

Answer 1

Answer:

a. Debit to Bad Debts Expense of $26,600

Explanation:

The computation of the bad debt expense is shown below:

= Allowance for uncollectible accounts - credit balance of allowance for uncollectible accounts

= $31,400 - $4,800

= $26,600

Hence, the first option is correct