Question

Use the same information as in question 4, except that Hughes has a debit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. In this situation, the amount of bad debt expense that should be reported for the year is:

Answer 1

Without the specific estimation details from question 4, it's impossible to determine the bad debt expense for Hughes. The debit balance in the Allowance for Doubtful Accounts needs to be adjusted based on the company's estimates for uncollectible accounts, which are not provided.

Step-by-step explanation:

The question relates to adjusting the Allowance for Doubtful Accounts and calculating the bad debt expense for the year in an accounting context. Unfortunately, without the specific details provided in question 4, it's impossible to calculate the precise bad debt expense for Hughes.

Generally, the bad debt expense would be determined based on the company's historical data and future expectations about the collectibility of its accounts receivable; adjustments would then be made to the allowance accordingly.

If the allowance had a debit balance of $5,000, it indicates that the initial estimates for uncollectible accounts were too low, and the company experienced more bad debts than anticipated. To correct this, the adjustment to raise the allowance to an appropriately estimated level would increase the bad debt expense for the period.

Since we do not have the amount Hughes estimates will be uncollectible (which would be included in question 4), we cannot calculate the bad debt expense without this necessary information.