Allowance for Doubtful Accounts has a credit balance of $1,500 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $17,900. Which of the following entries records the proper adjustment for Bad Debt Expense?

Question

Quizplus · Accepted Answer

The adjustment needed is the difference between the required balance ($17,900) and the existing credit balance ($1,500), which is $16,400. Therefore, debit Bad Debt Expense and credit Allowance for Doubtful Accounts by $16,400.

Allowance for Doubtful Accounts Has a Credit Balance of $1,500