The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to
A) Uncollectible Accounts Expense and a credit to Accounts Receivable.
B) Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
C) Allowance for Doubtful Accounts and a credit to Accounts Receivable.
D) Accounts Receivable and a credit to Allowance for Doubtful Accounts.

Question

Quizplus · Accepted Answer

The adjusting entry to record estimated losses from uncollectible accounts involves recognizing an expense (Uncollectible Accounts Expense) for the estimated amount of accounts that are unlikely to be collected from, as well as reducing the balance of the allowance account that was previously created to estimate these losses (Allowance for Doubtful Accounts). This is achieved by debiting Uncollectible Accounts Expense and crediting Allowance for Doubtful Accounts. This approach is based on the matching principle, which matches expenses to the period in which the revenue associated with those expenses is recognized. Choice A is incorrect because Accounts Receivable should not be credited since it has not yet been determined which accounts are unlikely to be collected. Choice C is incorrect because it involves only reducing the balance of the allowance account without recognizing the expense associated with the loss. Choice D is incorrect because it involves a direct reduction of Accounts Receivable without first recognizing the estimated loss as an expense.

The Adjusting Entry to Record Estimated Losses from Uncollectible Accounts