Question

There is a debit balance in Allowance for Uncollectible Account of $8,100 prior to adjusting entries....

There is a debit balance in Allowance for Uncollectible Account of $8,100 prior to adjusting entries. The aging of receivables method indicates $13,500 of accounts receivable will prove to be uncollectible. The amount of bad debt expense will be: A. $13,500. B. $21,600. C. $ 8,100. D. $ 5,400.

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Answer #1

Solution: The correct option is “ B” i.e $ 21,600

Working Note:

Estimate of uncollectible accounts Receivable= $ 13500

Allowance for uncollectible account= $ 8100(Debit balance)

Bad debt expense=$ 13500+ $ 8100= $ 21,600    

Therefore adjusting journal entry for bad debt expense:

               Bad debt expense----------------Dr 21600

                    To allowance for uncollectible accounts-----$ 21,600

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