Answer :
If the allowance for doubtful accounts already had a balance before the bad debts adjustment, we would add the estimated uncollectible accounts of $13,200 to the existing balance.
Given data: Estimated uncollectible accounts based on an aging analysis 13,200To calculate the balance in the allowance for doubtful accounts, the formula is;Allowance for doubtful accounts = estimated uncollectible accounts + existing balance of allowance for doubtful accounts.
The existing balance of the allowance for doubtful accounts is not given.
So, we cannot calculate the exact balance. We can only calculate the increase or decrease in the balance of the allowance for doubtful accounts.
If the increase is more than the existing balance, then the allowance for doubtful accounts will be in credit, otherwise, it will be in debit.
If we assume that the allowance for doubtful accounts was zero at the start, then the balance in the allowance for doubtful accounts after the bad debts adjustment would be:
Allowance for doubtful accounts = 13,200.This is because there is no existing balance in the allowance for doubtful accounts.
Therefore, the full estimated uncollectible accounts balance based on the aging analysis will be used to determine the new balance in the allowance for doubtful accounts.
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