On December 31, prior to adjustment, Allowance for Doubtful Accounts has a debit balance of
$730. An analysis of the aging of the accounts receivable produces an estimate of $6,200 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is
A)$5,470.
B)$730.
C)$6,930.
D)$6,200.

Question

Quizplus · Accepted Answer

To record the estimated losses from uncollectible accounts, we need to credit the Allowance for Doubtful Accounts for the estimated amount of $6,200. To account for the current balance of the Allowance for Doubtful Accounts ($730), we need to debit the account for that amount. Therefore, the adjusting entry would be a debit to Bad Debt Expense for $5,470 ($6,200 - $730) and a credit to Allowance for Doubtful Accounts for $6,200. Therefore, the correct choice is C.

On December 31, Prior to Adjustment, Allowance for Doubtful Accounts