On December 31 of the current year, TechCom's unadjusted trial balance included the following items: Accounts Receivable, debit balance of $107,250; Allowance for Doubtful Accounts, credit balance of $1,900. What amount should be debited to Bad Debt Expense, assuming 6% of outstanding accounts receivable as of December 31 of the current year, are estimated to be uncollectible?
A) $2,835
B) $3,755
C) $4,535
D) $6,435
E) $8,335

Question

Quizplus · Accepted Answer

First, we need to calculate the estimated amount of uncollectible accounts by multiplying the outstanding accounts receivable balance ($107,250) by the estimated bad debt percentage (6%):

$107,250 x 0.06 = $6,435

Next, we need to adjust the balance in the Allowance for Doubtful Accounts to reflect this estimated amount. Since the Allowance for Doubtful Accounts currently has a credit balance of $1,900, we need to increase it by the difference between the estimated amount and the current balance:

$6,435 - $1,900 = $4,535

This means we need to debit Bad Debt Expense for $4,535. Therefore, the correct answer is C.

On December 31 of the Current Year, TechCom's Unadjusted Trial