At December 31,200x,Brooke's Horse Stable unadjusted Allowance for Doubtful Accounts showed a debit balance of $432.An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000.The year-end adjusting entry for Bad Debts Expense:

Question

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The correct adjusting entry needs to increase the Allowance for Doubtful Accounts to the desired balance of $1,000. Since there's already a debit balance of $432, the adjustment must not only cover this existing debit but also establish the correct new balance. Therefore, a credit of $1,432 ($432 to offset the debit balance + $1,000 to reach the desired balance) to the Allowance account is needed.

At December 31,200x,Brooke's Horse Stable Unadjusted Allowance for Doubtful Accounts