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S Company’s unadjusted trial balance at December 31 (the end of the fiscal year) includes the...

S Company’s unadjusted trial balance at December 31 (the end of the fiscal year) includes the following accounts:

Allowance for Doubtful Accounts: Debit balance $4,000

Accounts Receivable: $1,5000,000

S Company estimates its bad debt expense to be 1.5% of ending receivables. Determine its bad debt expense for the fiscal year ended December 31.

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Expert Solution

Calculation of Estimated Credit Balance in Allowance for Doubtful Accounts required at the end of year:-
a Acounts Receivable = $15,000,000
b. % accounts receivable estimated to be uncollectible = 1.50%
c. Estimated Credit Balance in Allowance for Doubtful Accounts required (a*b) = $225,000
Calculation of Bad Debts Expense for the fiscal year ended December 31:-
a Estimated Credit Balance in Allowance for Doubtful Accounts required $                  225,000
b. Current Balance in Allowance for Doubtful Accounts (Debit) $                      4,000
c. Bad debts Expense for the year (a+b) $                 229,000

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Thank you.

ekkarill92 answered 2 years ago
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