On December 31 of the current year, a company's unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,250; Allowance for Doubtful Accounts, credit balance of $951. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?
A) $951.
B) $3,992.
C) $4,884.
D) $5,835.
E) $6,786.

Question

Quizplus · Accepted Answer

To calculate the amount to be debited to Bad Debts Expense, we need to first calculate the balance required in the Allowance for Doubtful Accounts account.

6% of the outstanding accounts receivable of $97,250 is $5,835.

The current balance in the Allowance for Doubtful Accounts account is a credit of $951.

So, we need to increase the balance in this account by $5,835 - $951 = $4,884.

Therefore, we should debit Bad Debts Expense for $4,884. Choice C is correct.

On December 31 of the Current Year, a Company's Unadjusted