The Allowance for doubtful debts currently has a debit balance of $900. After analysing the accounts in the accounts receivable subsidiary ledger using the ageing of accounts method, the company's management estimates that bad debts will be $15 000. What will be the amount of Bad debts expense reported on the income statement?
A)$15 900
B)$14 900
C)$14 100
D)$15 000

Question

Quizplus · Accepted Answer

The Allowance for doubtful debts should have a credit balance of $15,000. Since it currently has a debit balance of $900, you need to add $15,900 to reach the desired credit balance. Therefore, the Bad debts expense reported will be $15,900.

The Allowance for Doubtful Debts Currently Has a Debit Balance