If a company estimates its bad debt expense on the basis of a receivables aging, the balance in the Allowance for Doubtful Accounts account will not affect the amount of the end-of-period adjusting entry for bad debts.

Question

Quizplus · Accepted Answer

The balance in the Allowance for Doubtful Accounts account is used in calculating the necessary adjustment for the bad debt expense. Therefore, it will affect the amount of the end-of-period adjusting entry for bad debts.

If a Company Estimates Its Bad Debt Expense on the Basis