Upon completing an aging analysis of trade receivables, the accountant for Rosco Works estimated that $5,000 of the current $98,000 of trade receivables would be uncollectible. The allowance for doubtful accounts had a $400 credit balance at year-end prior to adjustment. What amount of bad debt expense should appear in Rosco's income statement for the year?

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The bad debt expense is calculated by adjusting the allowance for doubtful accounts to the estimated uncollectible amount. The allowance needs to be $5,000, but it already has a $400 credit balance, so an additional $4,600 is needed.

Upon Completing an Aging Analysis of Trade Receivables, the Accountant