On December 31, 2019, prior to adjustments, the Allowance for Doubtful Accounts has a debit balance of $750. An aging of the accounts receivable produces an estimate of $6,500 of probable losses from uncollectible accounts.
-The balance in the Allowance for Doubtful Accounts after the entry to record estimated losses from uncollectible accounts will be:

Question

On December 31, 2019, prior to adjustments, the Allowance for Doubtful Accounts has a debit balance of $750. An aging of the accounts receivable produces an estimate of $6,500 of probable losses from uncollectible accounts. 
-The balance in the Allowance for Doubtful Accounts after the entry to record estimated losses from uncollectible accounts will be:

Quizplus · Accepted Answer

To record the estimated losses from uncollectible accounts, we need to credit the Allowance for Doubtful Accounts. The estimated losses are $6,500, which means we need to credit the Allowance for Doubtful Accounts by $6,500. 
The current balance of the Allowance for Doubtful Accounts before the adjustment is a debit balance of $750. Hence, we need to subtract $750 from $6,500 to arrive at the final credit balance in the Allowance for Doubtful Accounts after the adjustment, which is $5,750 (Option A is incorrect as it is a credit of $7,250, Option D is incorrect as it shows a debit balance which is not possible for the Allowance for Doubtful Accounts). Thus, the correct answer is option C.

On December 31, 2019, Prior to Adjustments, the Allowance for Doubtful