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 net 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 $19,500, calculated as the estimated uncollectible amount ($25,000) minus the existing credit balance in the Allowance for Doubtful Accounts ($5,500). The adjusted balance of the Allowance for Doubtful Accounts will be $25,000.

At the End of the Current Year, Accounts Receivable Has