On December 31,prior to adjustment,Allowance for Doubtful Accounts has a credit balance of $400.An aging analysis of the accounts receivable produces an estimate of $2,000 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for
A) $400.
B) $1,600.
C) $2,000.
D) $2,400.

Question

Quizplus · Accepted Answer

The adjusting entry needed to record the estimated losses from uncollectible accounts is calculated as follows: 
$2,000 (estimated losses) - $400 (current credit balance in Allowance for Doubtful Accounts) = $1,600. Therefore, the adjusting entry is for $1,600, and the best choice is B.

On December 31,prior to Adjustment,Allowance for Doubtful Accounts Has a Credit