Green Garden Company estimates its doubtful accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. The Green Garden Company computes a total of $10,800 in estimated doubtful accounts as of December 31, 2019. Its Accounts Receivable account has a balance of $338,400 and its Allowance for Doubtful Accounts has a credit balance of $1,800 before adjustment at December 31, 2019.
How much bad debts expense will Green Garden report in 2019?

Question

Quizplus · Accepted Answer

To bring the allowance to the desired balance of $10,080, the Green Garden Company will need to increase the allowance account by $9,000, resulting in bad debts expense of that same amount.

Green Garden Company Estimates Its Doubtful Accounts by Aging Its