At the end of the current year,Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000.An analysis of receivables estimates uncollectible receivables as $25,000. Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts,respectively.
A)$19,500 and $25,000
B)$30,500 and $525,000
C)$19,500 and $525,000
D)$30,500 and $25,000

Question

Quizplus · Accepted Answer

The adjusting entry for bad debt expense is the difference between the estimated uncollectible receivables ($25,000) and the existing credit balance in the Allowance for Doubtful Accounts ($5,500), which is $19,500. The adjusted balance of the Allowance for Doubtful Accounts will be the estimated uncollectible amount of $25,000.

At the End of the Current Year,Accounts Receivable Has a Balance