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

Question

Quizplus · Accepted Answer

The allowance method involves estimating uncollectible accounts and creating an allowance for them. The adjusting entry to record estimated uncollectible receivables using the allowance method would involve debiting Bad Debts Expense (an expense account) and crediting Allowance for Doubtful Accounts (a contra asset account). This entry records the expense associated with estimated bad debt and reduces the balance in Accounts Receivable to its estimated net realizable value. Option A is the correct answer as it reflects this entry process.

To Record Estimated Uncollectible Receivables Using the Allowance Method, the Adjusting