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Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $12,000.The unadjusted balance for the Allowance for Doubtful Accounts is $2,000 credit.
-What is the amount of bad debts expense for the year?
A)$14,000
B)$12,000
C)$2,000
D)$10,000

Question

Use the following information for questions 
Under the aging of a company's accounts receivable, the uncollectible accounts are estimated to be $12,000.The unadjusted balance for the Allowance for Doubtful Accounts is $2,000 credit.
-What is the amount of bad debts expense for the year?
A)$14,000
B)$12,000
C)$2,000
D)$10,000

Quizplus · Accepted Answer

The bad debts expense is calculated by adjusting the Allowance for Doubtful Accounts to the estimated uncollectible amount. Since the allowance already has a $2,000 credit balance, the bad debts expense needed is $12,000 - $2,000 = $10,000.

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