Total doubtful accounts at the end of the year are estimated to be $12,500 based on an aging of accounts receivable.If the balance in the Allowance for Doubtful Accounts is a $3,500 debit before adjustment,what is current year's Bad Debt Expense?
A)$3,500
B)$9,000
C)$12,500
D)$16,000

Question

Quizplus · Accepted Answer

The aging of accounts receivable method focuses on estimating the ending balance to be reported in the Allowance for Doubtful Accounts.To compute the amount of the adjustment,you must determine how much to increase (credit)the Allowance for Doubtful Accounts to reach the desired adjusted balance.
Ending balance in Allowance for Doubtful Accounts = Unadjusted credit (debit)balance in Allowance for Doubtful Accounts + Bad Debt Expense
Bad Debt Expense = Ending balance in Allowance for Doubtful Accounts − Unadjusted ending credit (debit)balance in Allowance for Doubtful Accounts
= $12,500 − ($3,500)= $16,000

Total Doubtful Accounts at the End of the Year Are