A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $21,000 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $550. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Bad Debts Expense 21,000

Allowance for Doubtful Accounts 21,000

Bad Debts Expense 20,450

Allowance for Doubtful Accounts 20,450

Bad Debts Expense 21,550

Allowance for Doubtful Accounts 21,550

Accounts Receivable 21,000

Bad Debts Expense 550

Sales 21,550

Accounts Receivable 21,550

Allowance for Doubtful Accounts 21,550

Question

Business

Lloyd

1 September, 02:10

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $21,000 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $550. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Bad Debts Expense 21,000

Allowance for Doubtful Accounts 21,000

Bad Debts Expense 20,450

Allowance for Doubtful Accounts 20,450

Bad Debts Expense 21,550

Allowance for Doubtful Accounts 21,550

Accounts Receivable 21,000

Bad Debts Expense 550

Sales 21,550

Accounts Receivable 21,550

Allowance for Doubtful Accounts 21,550

+1

Answers (1)

Know the Answer?

Keaton Small · Answer 1

Bad Debts Expense 21,550

To Allowance for Doubtful Accounts 21,550

Explanation:

Before passing the adjusting entry, first we have to determine the adjusted amount which is shown below:

= Ending balance of accounts receivable + debit balance of Allowance for Doubtful Accounts

= $21,000 + $550

= $21,550

Now the adjusting entry would be

Bad debt expense A/c Dr $21,550

To Allowance for doubtful debts $21,550

(Being estimated bad debts is recorded)