Asked by david lopez on Jul 20, 2024
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Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment) . The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the bad debt expense for the year?
A) debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200
B) debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200
C) debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600
D) debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600
Allowance for Doubtful Accounts
A contra account that estimates the portion of accounts receivable which may not be collectible.
Uncollectible Accounts
Refers to debts owed to a company that it does not expect to be paid due to various reasons such as bankruptcy of the debtor.
Bad Debt Expense
An expense account that represents amounts deemed uncollectible from credit sales and highlights credit losses in financial statements.
- Become familiar with the application of the allowance method in accounting for bad debts.
- Determine the essential modifications for the reserve for doubtful accounts.
Verified Answer
Learning Objectives
- Become familiar with the application of the allowance method in accounting for bad debts.
- Determine the essential modifications for the reserve for doubtful accounts.
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