If a company estimates its bad debt expense on the basis of a receivables aging,the balance in the allowance for doubtful accounts will not affect the amount of the end-of-period adjusting entry for bad debts.

Question

Quizplus · Accepted Answer

The balance in the allowance for doubtful accounts is considered when estimating bad debt expense using the aging method, as the adjusting entry is made to bring the allowance account to the desired balance.

If a Company Estimates Its Bad Debt Expense on the Basis