Question

The Allowance for Bad Debts account has a debit balance of $9000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of-receivables method, the company's management estimates that uncollectible accounts will be $11,000. What amount of bad debts expense will be reported on the income statement?
A) $2000
B) $11,000
C) $8000
D) $20,000

Answer 1

Answer:

option (B) $20,000

Explanation:

Data provided in the question:

Existing balance in Allowance for Bad Debts account = $9,000

Estimate of uncollectible accounts = $11,000

Now,

Amount of Bad debts expense reported on the income statement will be

        Existing balance in Allowance for Bad Debts account       $9,000

Add: Estimate of uncollectible accounts                                       $11,000

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Amount of Bad debts expense reported on the income statement = $20,000

Hence,

The correct answer is option (B) $20,000

Answer 2

Amount of bad debts expense will be reported on the income statement is D) $20,000

Explanation:

Accounting is the process of recording financial transactions. Bad debts expense is a company's current asset accounts that receivable. Bad debts expense also uncollectible accounts expense or doubtful accounts expense.

The Allowance for Bad Debts account has a debit balance of $9000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of-receivables method, the company's management estimates that uncollectible accounts will be $11,000.

What amount of bad debts expense will be reported on the income statement?

The Income Statement is one of a company's core financial statements that shows profit and loss

• Existing balance in Allowance for Bad Debts account = $9,000
• Uncollectible accounts estimation =  $11,000

Existing balance in Allowance for Bad Debts account + Uncollectible accounts estimation

$= 9,000 +   11,000\\= 20,000$

Therefore an amount of bad debts expense will be reported on the income statement is

• A) $2000
• B) $11,000
• C) $8000
• D) $20,000

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