Asked by Ellsa Bonnell on Jul 19, 2024
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Upon completing an aging analysis of accounts receivable,the accountant for Rosco Works prepared an aging of accounts receivable and estimated that $5,000 of the $98,000 accounts receivable balance would be uncollectible.The allowance for doubtful accounts had a $400 debit balance at year-end prior to adjustment.What is the amount of bad debt expense?
A) $5,000.
B) $5,400.
C) $4,600.
D) $400.
Aging Analysis
A method to evaluate and categorize accounts receivable based on the length of time an invoice has been outstanding to manage and estimate financial health.
Allowance for Doubtful Accounts
An estimate made by a company to account for receivables that may not be collected due to credit risk.
Bad Debt Expense
An expense reported on the income statement, representing the amount of receivables a company does not expect to collect.
- Determine and calculate bad debt expense and understand the adjusting entries related to allowances for doubtful accounts.
Verified Answer
Learning Objectives
- Determine and calculate bad debt expense and understand the adjusting entries related to allowances for doubtful accounts.
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