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 $98,900; Allowance for Doubtful Accounts, credit balance of $1,131. What amount should be debited to Bad Debts Expense, assuming 4% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible

Answer 1

the bad debt expense is $2,825

Step-by-step explanation:

The computation of bad debt expense is shown below:

= Debit balance of account receivable × given percentage - credit balance of allowance for doubtful debts

= $98,900 × 4% - $1,131

= $3,956 - $1,131

= $2,825

Hence, the bad debt expense is $2,825

We simply applied the above formula so that the correct value could come

And, the same is to be considered