A debit balance in the Allowance for Doubtful Accounts
A)is the normal balance for that account.
B)indicates that actual bad debt write offs for the period are higher than previous provisions for bad debts.
C)indicates that actual bad debt write offs for the period have been less than what was estimated.
D)cannot occur if the percentage of receivables method of estimating bad debts is used.

Question

Quizplus · Accepted Answer

A debit balance in the Allowance for Doubtful Accounts indicates that actual bad debt write-offs have exceeded the previously estimated amounts set aside for bad debts. This situation arises when the actual defaults are more than what the company had anticipated and provisioned for in the allowance account.

A Debit Balance in the Allowance for Doubtful Accounts