otato Company began the period with an accounts receivable balance of $2,693 and a balance in the allowance for doubtful accounts of $494 The following transactions occurred in Potato Company a. During the period, customer balances are written off in the amount of $668 b. At the end of the period, bad debt expense is estimated to be $749. What is the balance in Allowance for Doubtful Accounts after these transactions

Question

Gemma Daniels

Business

24 July, 05:45

otato Company began the period with an accounts receivable balance of $2,693 and a balance in the allowance for doubtful accounts of $494 The following transactions occurred in Potato Company a. During the period, customer balances are written off in the amount of $668 b. At the end of the period, bad debt expense is estimated to be $749. What is the balance in Allowance for Doubtful Accounts after these transactions

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Julius Aguilar · Answer 1

Potato Company

Balance in Allowance for Doubtful Accounts is $575 (Credit).

Explanation:

We can use a T-account for the Allowance for Doubtful Accounts to determine the balance:

Allowance for Doubtful Accounts

a. Accounts Receivable $668 Beginning Balance $494

Ending Balance $575 b. Bad Debt Expense $749

$1,243 $1,243

Ending Balance $575

The allowance for doubtful accounts is a contra account to the Accounts Receivable account. Its purpose to provide some estimation of the uncollectibles as a way of managing the credit risk involved in trade sales.