The Allowance for doubtful debts has a credit balance of $8000 before the adjusting entry for bad debt expense.After analysing the accounts in the accounts receivable subsidiary ledger using the ageing method,the company's management estimates that uncollectable accounts will be $15,000.What will be the amount of bad debts expense reported on the income statement?

Question

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The bad debts expense is calculated as the difference between the estimated uncollectable accounts ($15,000) and the existing credit balance in the allowance for doubtful debts ($8,000), resulting in $7,000.

The Allowance for Doubtful Debts Has a Credit Balance of $8000