Smithson Corporation's unadjusted trial balance includes the following balances (assume normal balances): $\begin{array}{ll}
\text { Accounts Receivable } & \$ 3,357,000 \
\text { Alowances for Doubtful Accounts } & \$ 63,900
\end{array}$ Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record?
A) $201,420
B) $137,520
C) $133,686
D) $205,254

Question

Quizplus · Accepted Answer

The estimated bad debts are 6% of $3,357,000, which equals $201,420. The existing allowance is $63,900, so the bad debt expense to be recorded is $201,420 - $63,900 = $137,520.