Smart-T Corporation uses the aging-of-accounts-receivable method to estimate uncollectible receivables.At year end Smart-T estimates that $4,750 of its accounts receivable will be uncollectible.Prior to adjustment,the Allowance for Uncollectible Accounts has a credit balance of $200.Bad debt expense to be reported on the income statement is:

Question

Quizplus · Accepted Answer

The adjustment needed to update the Allowance for Uncollectible Accounts is calculated as follows:
Current credit balance in the Allowance for Uncollectible Accounts = $200
Estimated uncollectible accounts = $4,750
Adjustment needed = estimated uncollectible accounts - current credit balance in allowance
Adjustment needed = $4,750 - $200 = $4,550
Therefore, Bad Debt Expense to be reported on the income statement is the same as the adjustment needed, which is $4,550. Option C is the correct answer.

Smart-T Corporation Uses the Aging-Of-Accounts-Receivable Method to Estimate Uncollectible Receivables