A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $31,500 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $900. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Please see answer in explanation column

Explanation:

Account receivables for uncollectibles= $31,500

Allowance for Doubtful Accounts = debit balance of $900

Adjusting entry for bad debts expense =Account receivables + debit balance of $900

= $31,500 + 900

$32,400

Adjusting entry for the record of  bad debts expense  

Accounts titles                 Debit                       Credit

Bad debt expenses$ 32,400

To Allowance for doubtful accounts             $ 32,400

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