Allowance for doubtful accounts has a debit balance of $980 at the end of the current year (prior to adjustment). An analysis of the accounts in the customers' ledger indicates uncollectible accounts of $16,000. The adjusting entry would require a credit to:
A)bad-debt expense for $16,980.
B)allowance for doubtful accounts for $16,980.
C)allowance for doubtful accounts for $15,020.
D)accounts receivable accounts for $15,020.

Question

Quizplus · Accepted Answer

The correct adjusting entry to record the allowance for doubtful accounts would involve crediting the allowance account for the total desired balance ($16,000) plus the existing debit balance ($980), totaling $16,980. This corrects the account's balance and reflects the estimated uncollectible accounts.

Allowance for Doubtful Accounts Has a Debit Balance of $980