The allowance for bad debts account has a credit balance of $ 8 comma 300 before the adjusting entry for bad debts expense. after analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of-receivables method, the company's management estimates that uncollectible accounts will be $ 15 comma 000. what will be the balance of the allowance for bad debts reported on the balance sheet?

Question

Jaycee Mcintyre

Business

19 August, 00:28

The allowance for bad debts account has a credit balance of $ 8 comma 300 before the adjusting entry for bad debts expense. after analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of-receivables method, the company's management estimates that uncollectible accounts will be $ 15 comma 000. what will be the balance of the allowance for bad debts reported on the balance sheet?

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Answers (2)

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Rory Richard · Answer 1

The balance of the allowance for bad debts reported on the balance sheet will be $15,000.

Explanation:

As the company uses aging-of-receivables method for estimating the uncollectible accounts, the estimated uncollectible account amount after applying the method should be the Balance of the allowance for bad debts account.

It is because by applying the aging-of-receivables method, all the receivables are reviewed to come up with the final estimation, so the allowance for bad debts account should be equal to this estimation, which in the question, should be $15,000.

Mikey · Answer 2

The balance of the Allowance for Bad Debts reported on the balance sheet = 15,000