You have determined that company X estimates bad debt expense with an aging of accounts receivable schedule. Company Xs estimate of uncollectible receivables resulting from the aging analysis equals $250. The beginning balance in Allowance for Doubtful Accounts was $220. Write-offs of bad debts during the period were $180. What amount would be recorded as bed debt expense for the current period?

FINANCIAL ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

You have determined that company X estimates bad debt expense with an aging of accounts receivable schedule. Company X’s estimate of uncollectible receivables resulting from the aging analysis equals $250. The beginning balance in Allowance for Doubtful Accounts was $220. Write-offs of bad debts during the period were $180. What amount would be recorded as bed debt expense for the current period?

A	$180
B	$250
C	$210
D	$220

Explanation:

Detailed explanation-1: -Accounts receivable aging method The percentages will be estimates based on a company’s previous history of collection. The estimated percentages are then multiplied by the total amount of receivables in that date range and added together to determine the amount of bad debt expense.

Detailed explanation-2: -The basic method for calculating the percentage of bad debt is quite simple. Divide the amount of bad debt by the total accounts receivable for a period, and multiply by 100. There are two main methods companies can use to calculate their bad debts.

Detailed explanation-3: -The direct write-off method records the exact amount of uncollectible accounts as they are specifically identified. In order to comply with the matching principle, bad debt expense must be estimated using the allowance method in the same period in which the sale occurs.

Detailed explanation-4: -To record the bad debt expenses, you must debit bad debt expense and a credit allowance for doubtful accounts. With the write-off method, there is no contra asset account to record bad debt expenses. Therefore, the entire balance in accounts receivable will be reported as a current asset on the balance sheet.

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BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING