At the end of 2018,Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit)before any adjustment.The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method.Murray State's adjustment on December 31,2018,to record its estimated uncollectible accounts included a:

Question

Quizplus · Accepted Answer

The adjustment to record the estimated uncollectible accounts would require a debit to Bad Debt Expense for the amount of the increase in the estimate, which is $12,000 - $4,500 = $7,500. This would be offset by a credit to the Allowance for Uncollectible Accounts for the same amount. Therefore, the correct choice is D, which includes both the debit and the credit.

At the End of 2018,Murray State Lenders Had a Balance