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:

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chisnau chisnau · Answer 1 · 2019-09-13T16:45:19+02:00

Answer:

The answer is $4400.

Step-by-step explanation:

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

Experience suggests that 4% of outstanding receivables are un collectible.

So, its 4% becomes: [tex]0.04\times90000=3600[/tex] dollars

Now, the current balance in the allowance for doubtful accounts is an $800 credit.

Hence, the final answer is = [tex]3600+800=4400[/tex] dollars

The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for: $4400.