Question

The Allowance for Bad Debts account has a credit balance of $9,000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging−of−receivables ​method, the​ company's management estimates that uncollectible accounts will be $14,000. What will be the balance of the Allowance for Bad Debts reported on the balance​ sheet?

Answer 1

$14,000

Step-by-step explanation:

balance of account for doubtful accounts account = $9,000 (credit balance)

estimated collectible accounts = $14,000

the adjusting entry should be for = $14,000 - $9,000 = $5,000

December 31, 202x, bad debt expense

Dr Bad debt expense 5,000

Cr Allowance for doubtful accounts 5,000

Since the company uses the aging-of-receivables ​method, the balance sheet must report the amount determined using it.