The following information is from the 2017 records of Albert Book Shop
Accounts receivable, December 31, 2017 $47,000 (debit)
Allowance for Bad Debts, December 31, 2017
prior to adjustment 1,900 (debit)
Net credit sales for 2017 180,000
Accounts written off as uncollectible during 2017 17,000
Cash sales during 2017 28,000
Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $5,500 of accounts receivable will be uncollectible. Calculate the amount of bad debts expense for 2017.
A) $5,500
B) $7,400
C) $3,600
D) $5,750
B .Adjustment = Estimate based on aging + Allowance balance (debit) = $5,500 + $1,900 = $7,400
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