Question

Flyer prepares an aging of accounts receivable and the result shows that 4% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

Answer 1

Answer: The balance in allowance for doubtful accounts after bad debt expense is recorded is any existing balance in the allowance for doubtful accounts plus the bad debt expense.

Explanation: The question is not complete but balance in allowance for doubtful accounts can arrived at by constructing a movement schedule as follows:

Opening balance $XXX

Addition (Bad debt expense) XXX

Write-off (XXX)

Balance at end of the period/year XXX