When a company makes an adjustment in anticipation of future uncollectible debt:
A)it debits an asset account and credits a liability account.
B)it debits a revenue account and credits an asset account.
C)it debits a revenue account and credits an expense account.
D)it debits an expense account and credits a contra-asset account.

Question

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When a company makes an adjustment in anticipation of future uncollectible debt, it is creating an allowance for doubtful accounts. This allowance is a contra-asset account that is used to reduce the balance in the accounts receivable account to its net realizable value. Therefore, the company must debit an expense account (for example, bad debt expense) to recognize the anticipated loss and credit the contra-asset account (for example, allowance for doubtful accounts) to increase it.

When a Company Makes an Adjustment in Anticipation of Future