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ABC, Inc.'s unadjusted trial balance included Accounts Receivable $80,000 debit; Allowance for Doubtful Accounts $750 credit; and credit sales $400,000 credit. ABC uses the aging of accounts receivable method and estimates that $8,000 of its receivables will be uncollectible. After the adjusting entry is made, ABC's financial statements will report ______. (Check all that apply.) Multiple select question. Bad Debt Expense of $8,000 on the income statement Allowance for Doubtful Accounts of $7,250 on the balance sheet Allowance for Doubtful Accounts of $8,000 on the income statement Allowance for Doubtful Accounts of $8,000 on the balance sheet Bad Debt Expense of $7,250 on the balance sheet Bad Debt Expense of $7,250 on the income statement

Sagot :

Allowance for Doubtful accounts of $8000 and Bad debt expense of $7,250.

Given :

ABC, Inc.'s unadjusted trial balance included

Accounts receivable $80,000 debit;

Allowance for doubtful accounts $750 credit;

and credit sales $400,000 credit.

ABC uses the aging-of-receivables method and estimates that $8,000 of its receivables will be uncollectible. After the adjusting entry is made, ABC's financial statements will report $8000. allowance for doubtful accounts on the balance sheet &  bad debt expense of $7,250 on the income statement.

Using the aging-of-receivables method to estimate bad debt implies that we must consider the existing balance in the allowance for uncollectible account, unlike the percentage of sales method.

Therefore the entry will be a Bad debt expense of 8000 less 750 which is 7250 while the entire 8000 will be deducted from receivables in the Balance sheet.

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