The year-end journal entry to record bad debt expense reduces the accounts receivable account and increases net income.

Question

Quizplus · Accepted Answer

The year-end journal entry to record bad debt expense actually reduces the net income and increases the bad debt expense and allowance for doubtful accounts accounts, since it represents an estimate of uncollectible accounts receivable. It does not directly affect the accounts receivable account.

The Year-End Journal Entry to Record Bad Debt Expense Reduces