The Allowance for Bad Debts has a credit balance of $9,000 before the adjusting entry for bad debt expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging method, the company's management estimates that uncollectible 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 by adjusting the allowance to the estimated uncollectible amount. Since the allowance already has a $9,000 credit balance, an additional $6,000 is needed to reach the estimated $15,000.

The Allowance for Bad Debts Has a Credit Balance of $9,000