On December 31 of the current year, a company’s unadjusted trial balance included the following: Accounts Receivable, debit balance of $88,790; Allowance for Doubtful Accounts, credit balance of $1,245

Accounting Mar 25, 2021

On December 31 of the current year, a company’s unadjusted trial balance included the following: Accounts Receivable, debit balance of $88,790; Allowance for Doubtful Accounts, credit balance of $1,245. What amount should be debited to Bad Debts Expense, assuming 4% of outstanding accounts receivable at the end of the current year are considered uncollectible?

a. $1,245.00

b. $3,551.60

c. $4,796.60

d. $2,306.60

e. $87,545.00

Expert Solution

Answer:

d . $ 2,306.60

Step-by-Step explanation

Correct option is "D"

Desired balance in allowance account = ($88790 * 4%)

= $3551.6 credit balance

Current balance in allowance account = $1245

= ($355.6 - $1245)

= $2306.60

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