Question

Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is: a. $5,000. B. $55,000. C. $60,000. D. $65,000.

Answer 1

B . $55,000

Explanation:.

Calculation for the amount of bad debts expense which should be reported for the year.

Using this formula

Bad Debts=Uncollectible receivables-Allowance for Doubtful Accounts

Let plug in the formula

Bad Debts=$60,000-$5,000

Bad Debts=$55,000

The amount of bad debts expense which should be reported for the year is:$55,000