On December 31 of the current year,the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable,debit balance of $95,250; Allowance for Doubtful Accounts,credit balance of $921.What amount should be debited to Bad Debts Expense,assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?

Question

Quizplus · Accepted Answer

First, calculate 6% of the outstanding accounts receivable: $95,250 * 6% = $5,715. Then, adjust this amount by the existing credit balance in the Allowance for Doubtful Accounts: $5,715 - $921 = $4,794. This is the amount that should be debited to Bad Debts Expense.

On December 31 of the Current Year,the Unadjusted Trial Balance