If the Allowance for Doubtful Accounts has a $1,000 debit balance prior to making the end-of-period adjusting entry for bad debts,then it must mean that:
A)$1,000 more accounts receivables were written off than were estimated back when the prior period's adjusting entry for bad debts was recorded.
B)$1,000 fewer accounts receivables were written off than were estimated back when the prior period's adjusting entry for bad debts was recorded.
C)the direct write-off method was used.
D)the aging method was used.

Question

Quizplus · Accepted Answer

Although the Allowance for Doubtful Accounts normally has a credit balance,it may have a debit balance before it is adjusted.This happens when a company has recorded write-offs that exceed previous estimates of uncollectible accounts.

If the Allowance for Doubtful Accounts Has a $1,000 Debit