Question

Vaughn Manufacturing unadjusted trial balance includes the following balances (assume normal balances): • Accounts Receivable $1130000 • Allowances for Doubtful Accounts $23100 Bad debts are estimated to be 5% of outstanding receivables. What amount of bad debt expense will the company record?

Answer 1

Answer:

$33,400

Explanation:

Given that,

Accounts Receivable = $1,130,000

Allowances for Doubtful Accounts = $23,100

Estimated bad debts:

= 5% of outstanding receivables

= 0.05 × $1,130,000

= $56,500

We simply deduct the allowance for doubtful accounts balance from the estimated bad debts to record the amount of bad debt expense.

Amount of bad debt expense will the company record:

= Estimated bad debts - Allowances for Doubtful Accounts

= $56,500 - $23,100

= $33,400