Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debts expense for the period?
A) $7,000
B) $21,000
C) $28,000
D) $35,000

Question

Quizplus · Accepted Answer

The bad debts expense is calculated by adjusting the Allowance for Doubtful Accounts to the estimated uncollectible amount. Since the allowance account has a $7,000 debit balance, you need to add $35,000 to reach the $28,000 credit balance (i.e., $28,000 + $7,000 = $35,000).

Using the Allowance Method, the Uncollectible Accounts for the Year