The data presented below is for Mellon Corporation for the year ended December 31, 2016: $\begin{array}{lr}
\text { Sales (100\% on credit) } & \$ 1,500,000 \
\text { Sales returns } & 60,000 \
\text { Accounts Receivable (December 31, 2016) } & 250,000 \
\text { Allowance for Doubtful Accounts [Credit B al ance] (Before adjustment at December } & \
31,2016 &3,000 \
\text { Estimated amount of uncollectible accounts based on an aging analysis }&31,000\
\end{array}$
-Refer to the data for Mellon Corporation. ?
If Mellon uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2016?
A) $28,000
B) $31,000
C) $34,000
D) $50,000

Question

The data presented below is for Mellon Corporation for the year ended December 31, 2016: $\begin{array}{lr}
\text { Sales (100\% on credit) } & \$ 1,500,000 \
\text { Sales returns } & 60,000 \
\text { Accounts Receivable (December 31, 2016) } & 250,000 \
\text { Allowance for Doubtful Accounts [Credit B al ance] (Before adjustment at December } & \
31,2016 &3,000  \
\text { Estimated amount of uncollectible accounts based on an aging analysis }&31,000\
\end{array}$
-Refer to the data for Mellon Corporation. ?
If Mellon uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2016?
A) $28,000
B) $31,000
C) $34,000
D) $50,000

Quizplus · Accepted Answer

The bad debt expense for 2016 is calculated by adjusting the Allowance for Doubtful Accounts to the estimated uncollectible amount based on the aging analysis. The existing credit balance in the allowance account is $3,000, and the desired balance after adjustment is $31,000. Therefore, the bad debt expense is the difference between these two amounts, which is $31,000 - $3,000 = $28,000.

The Data Presented Below Is for Mellon Corporation for the Year