At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the bad debt expense is $45,000.

Question

At the end of a period  (before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the bad debt expense is $45,000.

Quizplus · Accepted Answer

The amount to be recorded in the adjusting entry for bad debt expense is calculated by subtracting the estimated uncollectible accounts from the existing credit balance in the allowance account. Therefore, $5,000 credit balance in the allowance account must be subtracted from the estimated uncollectible accounts of $50,000 to arrive at $45,000. Hence, the answer is A.

At the End of a Period (Before Adjustment), Allowance