The adjusting entry used to record the estimated bad debts in the period credit sales occur decreases:
A)both net income and net accounts receivable.
B)net income and increases liabilities.
C)assets and increases liabilities.
D)both selling expenses and net income.

Question

Quizplus · Accepted Answer

The entry to record the estimated bad debts in the period credit sales occur includes a debit to Bad Debt Expense and a credit to the Allowance for Doubtful Accounts.The debit increases an expense account and decreases net income.Since the credit is to a contra-asset account,the entry decreases total assets.

The Adjusting Entry Used to Record the Estimated Bad Debts