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

The amount of bad debt expense for the year should be $5,000.

Step-by-step explanation:

The amount of bad debt expense that should be reported for the year can be determined by adjusting the debit balance of $5,000 in the Allowance for Doubtful Accounts.

The adjusting entry for bad debt expense would increase the debit balance in the allowance account, resulting in a larger expense reported on the income statement. In this case, assuming there are no other adjustments, the amount of bad debt expense would be $5,000.