Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of credit sales. If credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivable
A) is $8,500
B) is $9,500
C) is $9,000
D) cannot be determined

Question

Quizplus · Accepted Answer

The estimated bad debt expense is 3% of $300,000, which is $9,000. Since the Allowance for Doubtful Accounts already has a credit balance of $500, the adjusting entry should be for the full estimated amount of $9,000.

Allowance for Doubtful Accounts Has a Credit Balance of $500