At the end of the year,Mark Inc.estimates future bad debts to be $6,500.The Allowance for Uncollectible Accounts has a credit balance of $2,500 before any year-end adjustment.What adjustment should Mark Inc.record for the estimated bad debts at the end of the year?

Question

Quizplus · Accepted Answer

The correct adjustment is to ensure the Allowance for Uncollectible Accounts equals the estimated future bad debts of $6,500. With a current credit balance of $2,500, an additional $4,000 (i.e., $6,500 - $2,500) needs to be added to reach the estimated total. This is done by debiting Bad Debt Expense and crediting Allowance for Uncollectible Accounts by $4,000.

At the End of the Year,Mark Inc