Acompany’s accounts receivable balance at its december 31 year-end is $125,650, and its allowance for doubtful accounts has a credit balance of $328 before year-end adjustment. its net sales are $572,300. it estimates that 4% of outstanding accounts receivable are uncollectible. what amount of bad debts expense is recorded at december 31? (a) $5,353(b) $328(c) $5,026(d) $4,698(e) $34,338

(D) $4,698

Explanation:

The journal entry to record the bad debt expense is shown below:

Bad debt expense A/c Dr  $4,698

  To Allowance for doubtful debts $4,698

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= (Accounts receivable × estimated percentage given ) - (credit balance of Allowance for Doubtful Accounts)

= ($125,650 × 4%) -  ($328)

= $5,026 - $328

= $4,698

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