When the allowance method is used to account for uncollectible accounts Bad Debt Expense is debited when
A) a sale is made.
B) an account becomes bad and is written off.
C) management estimates the amount of uncollectibles.
D) a customer's account becomes past-due.

Question

Quizplus · Accepted Answer

With the allowance method, Bad Debt Expense is debited based on management's estimate of the amount of uncollectible accounts. This is typically done at the end of an accounting period, when a company evaluates its accounts receivable and determines how much is likely to be uncollectible. Choices A, B, and D describe events that may lead to the creation of a bad debt expense, but they don't directly answer the question about when Bad Debt Expense is debited under the allowance method.

When the Allowance Method Is Used to Account for Uncollectible