Smart-T Corporation uses the aging-of-accounts-receivable method to estimate uncollectible receivables. At year end Smart-T estimates that $4,750 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a credit balance of $200. Bad debt expense to be reported on the income statement is:

Question

Quizplus · Accepted Answer

To find the bad debt expense to be reported on the income statement, we need to determine the amount of adjustment needed to the Allowance for Uncollectible Accounts.

Currently, the Allowance for Uncollectible Accounts has a credit balance of $200. However, we estimate that $4,750 of accounts receivable will be uncollectible.

To adjust the allowance, we need to increase the credit balance by the estimated uncollectible amount. Therefore, the adjustment should be:

$4,750 - $200 = $4,550

This means that the bad debt expense to be reported on the income statement is $4,550. Therefore, the best choice is B.

Smart-T Corporation Uses the Aging-Of-Accounts-Receivable Method to Estimate Uncollectible Receivables