Using the aging-of-accounts-receivable method to estimate uncollectible receivables, Records Management Corp. estimates that $8,000 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a debit balance of $2,000. Bad debt expense to be reported on the income statement is:

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The bad debt expense is calculated by adding the estimated uncollectible receivables ($8,000) to the existing debit balance in the Allowance for Uncollectible Accounts ($2,000), totaling $10,000. This is because the allowance account needs to be adjusted to reflect the new estimate, and the existing debit balance indicates that previous estimates were exceeded by actual bad debts.

Using the Aging-Of-Accounts-Receivable Method to Estimate Uncollectible Receivables, Records Management