Question

On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $95,250; Allowance for Doubtful Accounts, credit balance of $921. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible

Answer 1

$4,794

Step-by-step explanation:

The computation of the amount debited to bad debt expense is shown below:

= Account receivable × estimated percentage - credit balance of allowance for doubtful accounts

= $95,250 × 6% - $921

= $5,715 - $921

= $4,794

We deduct the credit balance from the estimated balance of account receivable so that the correct amount could come