Allowance for Doubtful Accounts has a credit balance of $1,400 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $17,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?
A) debit allowance for doubtful Accounts, $16,500; credit Bad Debt Expense, $16,500
B) debit Allowance for Doubtful Accounts $19,300; credit Bad Debt Expense, $19,300
C) debit Bad Debt Expense, $19,300; credit Allowance for Doubtful Accounts, $19,300
D) debit Bad Debt Expense, $16,500; credit allowance for Doubtful Accounts, $16,500

Question

Quizplus · Accepted Answer

The required balance in the Allowance for Doubtful Accounts is $17,900. Since there is already a credit balance of $1,400, the adjustment needed is $17,900 - $1,400 = $16,500. Therefore, debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $16,500.

Allowance for Doubtful Accounts Has a Credit Balance of $1,400