Question

At the end of the current year, using the aging of receivable method, management estimated that $28,500 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $800. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Multiple Choice

• Accounts Receivable	29,300
  Allowance for Doubtful Accounts		29,300

• Bad Debts Expense	27,700
  Allowance for Doubtful Accounts		27,700

• Accounts Receivable	28,500
  Bad Debts Expense	800
  Sales		29,300

• Bad Debts Expense	29,300
  Allowance for Doubtful Accounts		29,300

• Bad Debts Expense	28,500
  Allowance for Doubtful Accounts		28,500

Answer 1

Correct answer----------

Bad debts expense	$   29,300.00
Allowance for doubtful accounts		$   29,300.00

Working

Balance required in Allowance for doubtful accounts	$   28,500.00	Cr
Current unadjusted balance	$         800.00	Dr
Bad debts to re recorded	$   29,300.00	Cr