Kennedy Company uses the balance sheet approach in estimating uncollectible accounts expense.The company prepares an adjusting entry to recognize this expense at the end of each month.During the month of July,the company wrote-off a $3,500 receivable and made no recoveries of previous write-offs.Following the adjusting entry for July,the credit balance in the Allowance for Doubtful Accounts was $3,000 larger than it was on July 1.What amount of uncollectible account expense was recorded for July?
A)$2,500.
B)$1,000.
C)$1,500.
D)$6,500.

Question

Quizplus · Accepted Answer

The write-off of $3,500 reduces the Allowance for Doubtful Accounts. To have a $3,000 larger credit balance than at the start of July, the uncollectible account expense must be $6,500 ($3,500 write-off + $3,000 increase).

Kennedy Company Uses the Balance Sheet Approach in Estimating Uncollectible