Great Landscapes Company estimates its doubtful accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. The Great Landscapes Company computes a total of $3,600 in estimated doubtful accounts as of December 31, 2019. Its Accounts Receivable account has a balance of $112,800 and its Allowance for Doubtful Accounts has a credit balance of $600 before adjustment at December 31, 2019.
How much bad debts expense will Great Escapes report in 2019?

Question

Quizplus · Accepted Answer

To bring the allowance to the desired balance of $3,600, the Great Landscapes Company will need to increase the allowance account by $3,000, resulting in bad debts expense of that same amount.

Great Landscapes Company Estimates Its Doubtful Accounts by Aging Its