The Aging-of-Receivables Method helps us calculate the ending balance in the Allowance for Doubtful Accounts. We will have to use our BASE formula or T-account to calculate the Bad Debt Expense.

Concept #1: Net Accounts Receivable: Aging of Receivables Method

Practice: A company has gross accounts receivable totaling $150,000. The company uses the aging-of-receivables method to estimate the allowance for doubtful accounts. The company estimates that the amount of uncollectible receivables will be $3,600. Currently, the allowance for doubtful accounts has a debit balance of $800. What is the journal entry to record this year’s bad debt expense?