At December 31,201X,Brooke's Horse Stable unadjusted Allowance for Doubtful Accounts showed a credit balance of $432.An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000.The year-end adjusting entry for Bad Debts Expense:
A)includes a credit to the Allowance account for $568.
B)includes a debit to the Allowance account for $42.
C)includes a debit to the Allowance account for $822.
D)includes a credit to the Allowance account for $1,432.

Question

Quizplus · Accepted Answer

The adjusting entry should increase the Allowance for Doubtful Accounts to the estimated uncollectible amount of $1,000. Since there is already a credit balance of $432, an additional credit of $568 is needed ($1,000 - $432).

At December 31,201X,Brooke's Horse Stable Unadjusted Allowance for Doubtful Accounts