Question

2. Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debts expense for the period?a.$7,000b.$21,000c.$28,000d.$35,000

Answer 1

b. $21,000

Step-by-step explanation:

The accounting treatment for uncollectable accounts under allowance method is: Bad debts expense Debit and Allowance for doubtful accounts credit.

In the Question carried forward balance of Allowance for Doubtful accounts is $7,000 and the current year's allowance for doubtful accounts in total is $28,000.

So the amount for of bad debts expense for the period would be:

$28,000 - $7,000 = $21,000