An aging of a company's accounts receivable indicates that $4000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $700 debit balance the adjustment to record bad debts for the period will require a
A) debit to Bad Debt Expense for $3300.
B) debit to Bad Debt Expense for $4000.
C) debit to Bad Debt Expense for $4700.
D) credit to Allowance for Doubtful Accounts for $700.

Question

Quizplus · Accepted Answer

The correct adjustment is to debit Bad Debt Expense for $4700. This is because the existing $700 debit balance in the Allowance for Doubtful Accounts needs to be offset to reach the new estimated uncollectible amount of $4000. Therefore, $4000 + $700 = $4700 needs to be debited to Bad Debt Expense to correctly adjust the allowance account to the new estimate.

An Aging of a Company's Accounts Receivable Indicates That $4000