Using the percentage-of-receivables basis the uncollectible accounts for the year is estimated to be $33000. If the balance for the Allowance for Doubtful Accounts is a $5000 credit before adjustment what is the amount of bad debt expense for the period?
A) $5000
B) $28000
C) $33000
D) $38000

Question

Quizplus · Accepted Answer

Since the uncollectible accounts for the year is estimated to be $33000 and the calculation is based on the percentage-of-receivables basis, we can assume that $33000 is the total amount of uncollectible accounts.

Before adjustment, the balance for the Allowance for Doubtful Accounts is a $5000 credit. This means that $5000 has already been set aside for uncollectible accounts, leaving a balance of $28000 ($33000 - $5000).

To adjust the Allowance for Doubtful Accounts to its estimated amount of $33000, we need to increase the balance by $28000 ($33000 - $5000). This means that bad debt expense for the period is $28000.

Therefore, the best choice is B.

Using the Percentage-Of-Receivables Basis the Uncollectible Accounts for the Year