In recording the year-end adjusting entry for bad debt expense, a company would do which of the following?
A) Debit trade receivables.
B) Credit trade receivables.
C) Credit allowance for doubtful accounts.
D) Debit allowance for doubtful accounts.

Question

Quizplus · Accepted Answer

C) Credit allowance for doubtful accounts. - This is correct because when recording the year-end adjusting entry for bad debt expense, the company increases the allowance for doubtful accounts (a contra-asset account) to reflect estimated future bad debts, which is done by crediting this account.

In Recording the Year-End Adjusting Entry for Bad Debt Expense