Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900.Which of the following records the proper provision for doubtful accounts?
A) Increase Uncollectible Accounts Expense, $14,000; increase Allowance for Doubtful Accounts, $14,000
B) Decrease Allowance for Doubtful Accounts, $14,000; decrease Uncollectible Accounts Expense, $14,000
C) Decrease Allowance for Doubtful Accounts, $11,800; decrease Uncollectible Accounts Expense, $11,800
D) Increase Uncollectible Accounts Expense, $11,800; increase Allowance for Doubtful Accounts, $11,800

Question

Quizplus · Accepted Answer

The provision for doubtful accounts should reflect the estimated amount of accounts receivable that will not be collected. The analysis of customers' accounts indicates doubtful accounts of $12,900, which is the estimated amount of uncollectible accounts. The current balance in the Allowance for Doubtful Accounts account is $1,100, which means that the account needs to be increased by $11,800 ($12,900 - $1,100) to reflect the estimated doubtful accounts. This increase is recorded as a debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts, so the proper journal entry is to increase Uncollectible Accounts Expense, $11,800, and increase Allowance for Doubtful Accounts, $11,800. Therefore, the correct choice is D.

Allowance for Doubtful Accounts Has an Unadjusted Balance of $1,100