Question

Bailey Company has $200,000 of accounts receivable on December 31. The unadjusted balance of its Allowance for Doubtful Accounts is a debit of $9,000. An aging of its accounts receivable suggests that $12,000 of its receivables will be uncollectible. The amount that should be debited to Bad Debt Expense and credited to Allowance for Doubtful Accounts in the year-end adjusting entry is _______.

Answer 1

Answer:

$21,000

Explanation:

Given that,

Balance in allowance for doubtful accounts = $12,000

Unadjusted balance of allowance for doubtful accounts (Debit balance) = $9,00

Accounts receivable on December 31 = $200,000

Bad debt expense:

= Balance in allowance for doubtful accounts - Unadjusted balance of allowance for doubtful accounts (Debit balance)

= $12,000 + $9,000

= $21,000