Benson Company estimates its uncollectible accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. Benson computes a total of $1,800 in estimated uncollectible accounts as of December 31. Its Accounts Receivable account has a balance of $56,400 and its Allowance for Doubtful Accounts has a balance of $300 before adjustment at December 31.
How much bad debt expense will Benson report in the current year?

Question

Quizplus · Accepted Answer

The bad debt expense is calculated as the difference between the estimated uncollectible accounts ($1,800) and the existing balance in the Allowance for Doubtful Accounts ($300). Therefore, the bad debt expense is $1,800 - $300 = $1,500.

Benson Company Estimates Its Uncollectible Accounts by Aging Its Accounts