To record estimated uncollectible accounts using the allowance method for uncollectible accounts,the adjusting entry would be a debit to:
A)Accounts Receivable and a credit to Allowance for Doubtful Accounts.
B)Bad Debts Expense and a credit to Allowance for Doubtful Accounts.
C)Allowance for Doubtful Accounts and a credit to Accounts Receivable.
D)Loss on Credit Sales and a credit to Accounts Receivable.

Question

Quizplus · Accepted Answer

The allowance method for uncollectible accounts involves estimating the amount of accounts receivable that are unlikely to be collected and recording them as a bad debts expense. This is done by debiting Bad Debts Expense and crediting the Allowance for Doubtful Accounts, which is a contra-asset account used to reduce the balance of Accounts Receivable to its net realizable value. Option A is incorrect because it would increase the balance of Accounts Receivable rather than reduce it. Option C is incorrect because it would decrease the balance of the Allowance for Doubtful Accounts rather than increase it. Option D is incorrect because it does not follow the accounting principles for recording estimated uncollectible accounts using the allowance method.

To Record Estimated Uncollectible Accounts Using the Allowance Method for Uncollectible