The amount of uncollectible accounts at the end of the year is estimated to be $25,000 using the aging of accounts receivable method. The balance in the Allowance of Doubtful Accounts account is an $8,000 credit before adjustment. Assuming no accounts are written off during the period, what will be the amount of bad debt expense for the period?
A) $8,000.
B) $17,000.
C) $25,000.
D) $33,000.

Question

Quizplus · Accepted Answer

According to the question, the estimated uncollectible accounts are $25,000. The balance in the Allowance for Doubtful Accounts account before adjustment is $8,000.

To calculate the required bad debt expense, we need to find the increase in the allowance for doubtful accounts from the current balance of $8,000 to the required balance of $25,000, which is $17,000 ($25,000 - $8,000).

Therefore, the bad debt expense for the period will be $17,000. Option B is correct.

The Amount of Uncollectible Accounts at the End of the Year