An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a
A) debit to Bad Debts Expense for $9,000.
B) debit to Allowance for Doubtful Accounts for $7,900.
C) debit to Bad Debts Expense for $7,900.
D) credit to Allowance for Doubtful Accounts for $9,000.

Question

Quizplus · Accepted Answer

The aging of accounts receivable indicates that $9,000 are estimated to be uncollectible, so the company needs to make an adjustment to its Allowance for Doubtful Accounts. Since the credit balance in the Allowance account is only $1,100, a debit of $7,900 is needed to increase the balance to the required $9,000. This debit is made to Bad Debts Expense to reflect the expense associated with the estimated uncollectible accounts. Therefore, the correct choice is C: debit to Bad Debts Expense for $7,900.

An Aging of a Company's Accounts Receivable Indicates That $9,000