Question

Using the percentage of receivables method for recording bad debt expense, estimated uncollectible accounts are $14,000. If the balance of the Allowance for Doubtful Accounts is $2,000 debit before adjustment, what is the amount of bad debt expense?

Answer 1

$14,000

Step-by-step explanation:

The Allowance for Doubtful Accounts account can have either a debit or credit balance before the year-end adjustment.

Under the percentage-of-sales method, the company ignores any existing balance in the allowance when calculating the amount of the year-end adjustment.

Hence the amount of bad debt expense will be $14,000.