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At the end of the current year, using the aging of receivable method, management estimated that $28,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $505. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense

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Answer:

DR Bed Debt Expense                                                   $28,245

      CR Allowance for Doubtful Accounts                                       $28,245

Explanation:

The Bad Debts expense figure for the year is;

= Accounts to be uncollected - Credit balance in Allowance for doubtful debt account

= 28,750 - 505

= $28,245

Debit this figure to the Bad Debt Expense account and Credit it to the Allowance for Doubtful Accounts.

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