Question

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts and, the amount estimated to be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.True / False.

Answer 1

Answer:

The answer is: False

Explanation:

The formula for calculating bad debt expenses is:

Bad debt expenses = total estimated uncollectible accounts - Allowance for Doubtful Accounts

Bad debt expenses = $15,000 - $2,000 = $13,000

Allowance for Doubtful Accounts is a contra asset account, while Uncollectiible Accounts is an expense.