At December 31, 201X, Aaron's Produce unadjusted Allowance for Doubtful Accounts showed a credit balance of $520. An aging of the Accounts Receivable indicates probable uncollectible accounts of $4,000. The year-end adjusting entry for Bad Debts Expense:
A) includes a credit to the Allowance account for $3,480.
B) includes a debit to the Allowance account for $520.
C) includes a debit to the Allowance account for $4,000.
D) includes a credit to the Allowance account for $4,520.

Question

Quizplus · Accepted Answer

The correct adjustment is to credit the Allowance for Doubtful Accounts for $3,480, which is the difference between the desired balance ($4,000) and the existing credit balance ($520). This ensures the Allowance account reflects the estimated uncollectible accounts.

At December 31, 201X, Aaron's Produce Unadjusted Allowance for Doubtful