Driver Company expects that $17,500 of its $437,500 Accounts Receivable balance is uncollectible. The Allowance for Doubtful Accounts before adjustment has a debit balance of $2,400. The amount of the adjusting entry needed by Driver is:
A)$17,500
B)$19,900
C)$15,100
D)$420,000
E)$422,400

Question

Quizplus · Accepted Answer

The adjusting entry needed by Driver is to increase the Allowance for Doubtful Accounts by $17,500, which is the amount of uncollectible accounts receivable. The adjusting entry will be:Debit: Bad Debt Expense $17,500Credit: Allowance for Doubtful Accounts $17,500The new balance of the Allowance for Doubtful Accounts will be $17,500 + $2,400 = $19,900.

Driver Company Expects That $17,500 of Its $437,500 Accounts Receivable