If the Allowance for Doubtful Accounts has a $1,000 debit balance prior to making the end-of-period adjusting entry for bad debts using the aging of accounts receivable method,then it must mean that the:
A)debit to Bad Debt Expense will be $1,000 more than the desired ending balance in the Allowance for Doubtful Accounts.
B)debit to Bad Debt Expense will be $1,000 less than if the Allowance balance had been $0.
C)direct write-off method was used.
D)percentage of sales 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