Question

The Allowance for Bad Debts account has a debit balance of $ 7 comma 000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary​ ledger, the​ company's management estimates that uncollectible accounts will be $ 10 comma 000. What will be the amount of the adjustment in the Allowance for Bad Debts​ account?

Answer 1

$17,000

Step-by-step explanation:

The amount of the Allowance for Bad Debts​ account after adjustment is shown below:

= Debit balance of Allowance for Bad Debts account + uncollectible accounts

= $7,000 + $10,000

= $17,000

The journal entry is also shown for better understanding

Bad debt expense A/c Dr $17,000

To Allowance for doubtful debts $17,000

(Being bad debt expense is recorded)