Question

Wheeling Inc. uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $5,900. At the end of the year, the balance of Accounts Receivable is $109,000 and the unadjusted debit balance of the Allowance for Doubtful Accounts is $680. Credit sales during the year totaled $168,000. What is the estimated Bad Debt Expense for the current year

Answer 1

$5,220

Step-by-step explanation:

Given that

Estimated from ageing analysis = $5,900

Unadjusted debit balance of the Allowance for Doubtful Accounts = $680

The calculation of Bad Debt Expense is given below:-

The estimated Bad Debt Expense for the current year = Estimated from ageing analysis - Unadjusted debit balance of the Allowance for Doubtful Accounts

= $5,900 - $680

= $5,220

Therefore for computing the bad debt expenses for the current year we simply applied the above formula.