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17 May, 02:56

At the end of the year, the unadjusted balance in the Allowance for Uncollectible Accounts is $951 credit and Accounts Receivable $97,250 debit balance. What is the amount should be debited to Bad Debt Expense, assuming 6% of outstanding accounts receivable at the end of the year is uncollectable?

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  1. 17 May, 04:56
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    The correct answer is $4,884.

    Explanation:

    According to the scenario, the given data are as follows:

    Account Receivable (debit) = $97,250

    Uncollectable accounts (credit) = $951

    Uncollectable percentage = 6%

    So, the amount of bad debt can be calculated using the following formula:

    Firstly, we calculate the amount that will be uncollectable at the end of the year:

    = Account Receivable (debit) * uncollectable percentage

    = $97,250 * 6%

    = $5,835

    As uncollectable accounts have the credit of $951, then

    = $5,835 - $951

    = $4,884

    Hence, the amount should be debited to Bad Debt Expense is $4,884
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