The following information is from the 2017 records of Albert Book Shop: $\begin{array}{|l|r|}
\hline
\text { Accounts receivable, December } 31,2017 & \$ 47,000 \text { (debit } \
\hline \text { Allowance for Bad Debts, December 31,2017 } \
\text { prior to adjustment }& 1,900 \text { (debit }
\
\hline \text { Net credit sales for 2017 }& 180,000 \
\hline \text { Accounts written off as uncollectible during } \
2017 & 17,000 \
\hline \text { Cash sales during } 2017 & 28,000\
\hline
\end{array}$ Bad debts expense is estimated by the aging-of-receivables method.Management estimates that $5,500 of accounts receivable will be uncollectible.Calculate the amount of bad debts expense for 2017.

Question

The following information is from the 2017 records of Albert Book Shop: $\begin{array}{|l|r|}
\hline
\text { Accounts receivable, December } 31,2017 & \$ 47,000 \text { (debit } \
\hline \text { Allowance for Bad Debts, December 31,2017 } \
\text { prior to adjustment }& 1,900 \text { (debit } 
\
\hline \text { Net credit sales for 2017 }& 180,000 \
\hline \text { Accounts written off as uncollectible during }  \
2017 & 17,000 \
\hline \text { Cash sales during } 2017 & 28,000\
\hline  
\end{array}$ Bad debts expense is estimated by the aging-of-receivables method.Management estimates that $5,500 of accounts receivable will be uncollectible.Calculate the amount of bad debts expense for 2017.

Quizplus · Accepted Answer

The allowance for bad debts needs to be adjusted to $5,500. Since the allowance account has a $1,900 debit balance, the bad debts expense is $5,500 + $1,900 = $7,400.

The Following Information Is from the 2017 Records of Albert