Accelerated Solutions The following data are from the company's records for 2012:
$\begin{array}{ll}
\text { Accounts receivable-J anuary 1, 2012 } & \$ 350,000 \
\text { Credit sales during 2012 } & 1,200,000 \
\text { Collections from cre dit customers during 2012 } & 850,000 \
\text { Customer accounts written off as uncollected during 2012 } & 10,000 \
\text { Allowance for doubtul accounts-Jamuaty 1, 2012 } & 35,000 \
\text { Estimated uncollected accounts bassed on an aging analysis } & 50,000
\end{array}$
-Refer to Accelerated Solutions.If the aging method is used to estimate bad debts,what amount should be recorded as bad debt expense for 2012?

Question

Accelerated Solutions The following data are from the company's records for 2012:
$\begin{array}{ll}
\text { Accounts receivable-J anuary 1, 2012 } & \$ 350,000 \
\text { Credit sales during 2012 } & 1,200,000 \
\text { Collections from cre dit customers during 2012 } & 850,000 \
\text { Customer accounts written off as uncollected during 2012 } & 10,000 \
\text { Allowance for doubtul accounts-Jamuaty 1, 2012 } & 35,000 \
\text { Estimated uncollected accounts bassed on an aging analysis } & 50,000
\end{array}$ 
-Refer to Accelerated Solutions.If the aging method is used to estimate bad debts,what amount should be recorded as bad debt expense for 2012?

Quizplus · Accepted Answer

The aging method estimates bad debts based on the length of time an account is past due. Given that the estimated uncollected accounts based on the aging analysis is $50,000 and the allowance for doubtful accounts on January 1, 2012 is $35,000, we can calculate the required ending balance of the allowance account:

Required ending balance = (Estimated uncollected accounts) - (Existing allowance for doubtful accounts)
Required ending balance = $50,000 - $35,000
Required ending balance = $15,000

Since the existing allowance account has a balance of $35,000, an additional amount of $15,000 is needed to reach the required ending balance of $50,000. This additional amount is the bad debt expense for 2012 and is calculated as:

Bad debt expense = Required ending balance - Beginning balance
Bad debt expense = $15,000 - $0 (assuming no other adjustments made during the year)
Bad debt expense = $15,000

Therefore, the amount that should be recorded as bad debt expense for 2012 is $15,000.

Accelerated Solutions the Following Data Are from the Company's Records