Question

Using the aging-of-accounts-receivable method to estimate uncollectible receivables, Listless Corp. estimates that $11,500 of its accounts receivable will be Doubtful. Prior to adjustment, the Allowance for Doubtful Accounts has a credit balance of $2,500. Bad debt expense to be reported on the income statement is:

Select one:
a. $9,000
b. $11,500
c. $2,500
d. $14,000

Answer 1

The aging-of-accounts-receivable method estimates that $11,500 of Listless Corp's receivables are doubtful. The Allowance for Doubtful Accounts has a prior credit balance of $2,500. The bad debt expense to be reported is $9,000.

Step-by-step explanation:

When using the aging-of-accounts-receivable method to estimate uncollectible receivables, Listless Corp has determined that $11,500 of its accounts receivable are estimated to be doubtful. With a prior credit balance of $2,500 in the Allowance for Doubtful Accounts, the adjustment for bad debt expense reported on the income statement is the difference between the estimated uncollectible receivables and the existing credit balance. Therefore, the bad debt expense to be reported is $11,500 (estimated uncollectible receivables) - $2,500 (existing credit balance), which equals $9,000.

The aging-of-accounts-receivable method estimates that $11,500 of Listless Corp's receivables are doubtful. The Allowance for Doubtful Accounts has a prior credit balance of $2,500. The bad debt expense to be reported is $9,000.

Answer 2

The aging-of-accounts-receivable method estimates that $11,500 of Listless Corp's receivables are doubtful. The Allowance for Doubtful Accounts has a prior credit balance of $2,500. The bad debt expense to be reported is $9,000.

Step-by-step explanation:

When using the aging-of-accounts-receivable method to estimate uncollectible receivables, Listless Corp has determined that $11,500 of its accounts receivable are estimated to be doubtful. With a prior credit balance of $2,500 in the Allowance for Doubtful Accounts, the adjustment for bad debt expense reported on the income statement is the difference between the estimated uncollectible receivables and the existing credit balance. Therefore, the bad debt expense to be reported is $11,500 (estimated uncollectible receivables) - $2,500 (existing credit balance), which equals $9,000.

The aging-of-accounts-receivable method estimates that $11,500 of Listless Corp's receivables are doubtful. The Allowance for Doubtful Accounts has a prior credit balance of $2,500. The bad debt expense to be reported is $9,000.