Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debts expense for the period?
A) $7,000
B) $21,000
C) $28,000
D) $35,000

Question

Quizplus · Accepted Answer

The amount of bad debts expense for the period can be calculated as follows:
Bad Debts Expense = Estimated Uncollectible Accounts - Existing Credit Balance in Allowance for Doubtful Accounts
Bad Debts Expense = $28,000 - $7,000 = $21,000 (Option B)

Using the Allowance Method, the Uncollectible Accounts for the Year