Empire has a credit balance of $450 in its Allowance for Doubtful Accounts.The balance in the Accounts Receivable account is $92,500,with $2,015 estimated to be uncollectible after aging the accounts.Under the balance sheet approach,the debit to Bad Debt Expense will be:
A)$450.
B)$2,465.
C)$2,015.
D)$1,565.

Question

Quizplus · Accepted Answer

The balance sheet approach requires adjusting the Allowance for Doubtful Accounts to the estimated uncollectible amount. Since the allowance already has a $450 credit balance, the adjustment needed is $2,015 (estimated uncollectible) - $450 (existing credit balance) = $1,565.

Empire Has a Credit Balance of $450 in Its Allowance