When using the allowance method,the year-end journal entry to record bad debt expense reduces current assets and net income.

Question

Quizplus · Accepted Answer

The allowance method involves estimating and recording a bad debt expense at the end of a financial period. This entry reduces current assets (specifically accounts receivable) by the amount of the estimated bad debt and also reduces net income by the same amount, reflecting the expectation that some portion of the company's sales will not be collected.

When Using the Allowance Method,the Year-End Journal Entry to Record