The beginning credit balance in the allowance for doubtful accounts is $12,656 and the ending credit balance is $14,348. If bad debt expense was $3,879, which of the following statements is true?
A) The allowance account was retroactively debited $2,187 for additional bad debts that became apparent in a future time period.
B) The allowance account was debited $2,187 for write-offs of actual bad debts.
C) The allowance account was credited $2,187 for recoveries of bad debts.
D) The allowance account was credited $2,187 for the difference between the percent of credit sales method and the aging of accounts receivable method.

Question

Quizplus · Accepted Answer

The increase in the credit balance from $12,656 to $14,348 represents the addition of $1,692 to the allowance account. Since the bad debt expense was $3,879, the company must have also written off $2,187 of actual bad debts during the same period, resulting in a debit to the allowance account. Therefore, choice B is correct. Choices A, C, and D are not supported by the information given in the question.

The Beginning Credit Balance in the Allowance for Doubtful Accounts