Jody Sport and Hobby's Allowance for Doubtful Accounts had an unadjusted credit balance of $600.The manager estimates that $700 of the Accounts Receivable is uncollectible.Using the balance sheet approach,the year-end adjusting entry for Bad Debts Expense:
A)includes a debit to the Bad Debt Expense account for $100.
B)includes a debit to the Bad Debts Expense account for $700.
C)includes a credit to the Bad Debts Expense account for $1,300.
D)includes a credit to the Bad Debts Expense account for $100.

Question

Quizplus · Accepted Answer

The balance sheet approach requires adjusting the Allowance for Doubtful Accounts to the estimated uncollectible amount. Since the unadjusted balance is $600 and the estimated uncollectible amount is $700, the adjusting entry should be for the difference, which is $100.

Jody Sport and Hobby's Allowance for Doubtful Accounts Had an Unadjusted