In preparing the financial statements for January,the accountant for Team Shirts has compiled the following information: accounts receivable are $5,000; the amount estimated to be uncollectible is 10% of receivables; sales for the month were $43,000; and the balance in the allowance for uncollectible accounts is a positive $100.Using the accounts receivable allowance method,the amount of bad debts expense for January is ________.

Question

Quizplus · Accepted Answer

To calculate bad debt expenses using the accounts receivable allowance method, we need to subtract the balance in the allowance for uncollectible accounts from the estimated amount of uncollectible accounts. The estimated amount of uncollectible accounts is 10% of accounts receivable, which is $5,000 x 0.10 = $500. Since the allowance for uncollectible accounts has a positive balance of $100, we subtract this from the estimated amount of uncollectible accounts to get $500 - $100 = $400. Therefore, the bad debt expense for January is $400.

In Preparing the Financial Statements for January,the Accountant for Team