If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in:
A) An increase in the expenses of the current period.
B) A reduction in current assets.
C) A reduction in equity.
D) No effect on the expenses of the current period.
E) A reduction in current liabilities.

Question

Quizplus · Accepted Answer

When the credit balance of Allowance for Doubtful Accounts account exceeds the amount of bad debt being written off, it means that more has been reserved for doubtful debts than is actually required. Therefore, there is no need to recognize additional expense at the time of writing off the debt since it has already been accounted for in the past by increasing the allowance account. As a result, option D is correct, and there will be no effect on the expenses of the current period when writing off the bad debt.

If the Credit Balance of the Allowance for Doubtful Accounts