An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a
A) debit to Allowance for Doubtful Accounts for $3,200
B) debit to Bad Debt Expense for $3,200
C) debit to Allowance for Doubtful Accounts for $4,000
D) credit to Allowance for Doubtful Accounts for $4,000

Question

Quizplus · Accepted Answer

The adjustment to record the bad debt expense for the period requires increasing the allowance for doubtful accounts by the estimated uncollectible amount, which is $4,000. Since there is already a credit balance of $800 in the allowance account, the adjustment requires an additional debit of $3,200 to the bad debt expense account to bring the total to $4,000. Therefore, the correct choice is Option B - debit to Bad Debt Expense for $3,200.

An Aging of a Company's Accounts Receivable Indicates That the Estimate