Question

An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $4,979. If Allowance for Doubtful Accounts has a $1,325 credit balance, the adjustment to record the bad debt expense for the period will require a_________.

Answer 1

The adjustment to record the bad debt expense for the period will require a debit $3,654

Step-by-step explanation:

There are two way to estimate uncollectible accounts: the percentage of sales method and the accounts receivable aging method.

The company uses the accounts receivable aging method to estimate the uncollectible accounts and estimated uncollectible of $4,979

Before adjustment, Allowance for Doubtful Accounts has a $1,325 credit balance.

Bad debt expense for the period = $4,979 - $1,325 = $3,654