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Jay Inc. estimates uncollectible accounts using the percentage-of-receivables method and expects that 3.5% of outstanding receivables will be uncollectible for 2016. The balance in Accounts Receivable is $243,000, and the Allowance for Doubtful Accounts has a credit balance of $4,300 before adjustments at year-end. The Bad Debt Expense for 2016 will be:

Select one:

a. $8,505

b. $5,423

c. $4,205

d. $4,300

Respuesta :

Answer:

c. $ 4,205

Explanation:

Computation of Estimated uncollectible accounts

Accounts Receivable balance                                                         $ 243,000

Percentage of outstanding receivable considered uncollectible        3.5 %

Uncollectible accounts balance = $ 243,000 * 3.5 %                  $    8,505

Existing balance in uncollectible account                                     $  ( 4,300)

Bad debts expense for the year                                                      $  4,205

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