Question

What will be ththe allowance for uncollectible accounts currently has a credit balance of​ $900. after analyzing the accounts in the accounts receivable subsidiary ledger using the aging​ method, the​ company's management estimates that uncollectible accounts will be​ $15,000. what will be the balance of the uncollectible accounts expense reported on the income​ statement?

a) $15,900
b) $900
c) $14,100
d) $15,000

Answer 1

To calculate the uncollectible accounts expense, subtract the existing allowance credit balance from the new estimate, which results in $14,100 (Option c).

Step-by-step explanation:

The question pertains to the calculation of the allowance for uncollectible accounts and the resulting bad debt expense to be reported on the income statement. With a current credit balance of $900 in the allowance account, and after analysis using the aging method, management estimates uncollectible accounts to be $15,000.

The bad debt expense is the amount that will adjust the allowance to this new estimated balance. To find the expense to be reported on the income statement, we subtract the existing credit balance from the new estimate: $15,000 (new estimate) - $900 (existing balance) = $14,100 (bad debt expense).