When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when
A) a customer's account becomes past due
B) an account becomes bad and is written off
C) a sale is made
D) management estimates the amount of uncollectibles

Question

Quizplus · Accepted Answer

Bad Debt Expense is debited when management estimates the amount of uncollectibles using the allowance method. This is because the allowance method involves estimating and recording bad debts before they actually occur, rather than waiting until accounts become past due or are written off.

When the Allowance Method Is Used to Account for Uncollectible