The amount of uncollectible accounts at the end of the year is estimated,using the aging of receivables method,to be $25,000.The balance in the Allowance for Doubtful Accounts account is an $8,000 credit before adjustment.Assuming no accounts are written off during the period,what will be the amount of bad debts expense for the period?
A)$8,000.
B)$17,000.
C)$25,000.
D)$33,000.

Question

Quizplus · Accepted Answer

The bad debts expense for the period can be calculated as the difference between the desired ending balance of the allowance account and the current balance. The desired ending balance can be calculated as the estimated uncollectible accounts using the aging of receivables method, which is $25,000. The current balance in the allowance account is an $8,000 credit, so the bad debts expense for the period is:
$25,000 - $8,000 = $17,000 (Option B)

The Amount of Uncollectible Accounts at the End of the Year