An aging of a company's accounts receivable indicates that $4,200 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record bad debts for the period will require a
A) debit to Bad Debts Expense for $4,200.
B) debit to Allowance for Doubtful Accounts for $3,400.
C) debit to Bad Debts Expense for $3,400.
D) credit to Allowance for Doubtful Accounts for $5,000.

Question

Quizplus · Accepted Answer

The adjustment needed is the difference between the estimated uncollectible amount ($4,200) and the existing credit balance in the Allowance for Doubtful Accounts ($800), which is $3,400. Therefore, a debit to Bad Debts Expense for $3,400 is required.

An Aging of a Company's Accounts Receivable Indicates That $4,200