Wheeling Inc. uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $7,100. At the end of the year, the balance of Accounts Receivable is $121,000 and the unadjusted debit balance of the Allowance for Doubtful Accounts is $920. Credit sales during the year totaled $192,000. What is the estimated Bad Debt Expense for the current year

$8,020

Explanation:

estimated uncollectible receivables = $7,100

accounts receivables = $121,000

unadjusted debit balance of allowance for uncollectible accounts = $920

credit sales during the year = $192,000

bad debt expense = unadjusted debit balance + estimated uncollectible receivables = $7,100 + $920 = $8,020

the adjusting journal entry:

Dr Bad debt expense 8,020

    Cr Allowance for uncollectible accounts 8,020

The allowance for uncollectible accounts account is a contra asset account that has a normal credit balance.

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