A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.

Question

17 days ago

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A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts.

Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Mathematics

1 answer:

Svet_ta [9.5K] · Answer 1 · 2026-03-11T12:33:40+03:00

Answer:

The total is $4400.

Step-by-step explanation:

A certain company has $90,000 in accounts receivable that are outstanding.

It is estimated that 4% of these receivables will not be collectible.

This 4% translates to: $0.04\times90000=3600$ dollars

The current balance in the allowance for doubtful accounts stands at an $800 credit.

Consequently, the final calculation amounts to = $3600+800=4400$ dollars

The journal entry to adjust the allowance account requires a debit to Bad Debts Expense for: $4400.