Question

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $34,500 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $1,000. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Answer 1

$ 35,500

Step-by-step explanation:

Given data:

Uncollectible balance at the end of the year = $ 34,500

Debit balance in the doubtful accounts = $ 1,000

Now, the adjustments for the allowance = Uncollectible balance at the end of the year + Debit balance in the doubtful accounts

on substituting the values, we have

the adjustments for the allowance = $ 34,500 + $ 1,000 = $ 35,500

thus,

the bad debts expense for the current year is $ 35,500