Question

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $22,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $445. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense

Answer 1

The appropriate answer is "$22,305".

Step-by-step explanation:

The given values are:

Estimated uncollectible,

= $22,750

Credit balance in allowance,

= $445

Now,

The bad debt expense will be:

=
`Estimated \ uncollectible-Credit \ balance \ in \ allowance`

By substituting the values, we get

=
`22750-445`

=
`22305` ($)