An aging of a company's accounts receivable indicates that $6,500 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a
A)debit to Bad Debts Expense for $6,500.
B)debit to Allowance for Doubtful Accounts for $5,300.
C)debit to Bad Debts Expense for $5,300.
D)credit to Allowance for Doubtful Accounts for $7,700.

Question

Quizplus · Accepted Answer

To adjust for the estimated uncollectible amount, the Bad Debts Expense account needs to be increased, and the Allowance for Doubtful Accounts needs to be decreased. Since the allowance account currently has a credit balance of $1,200, it needs to be debited by the amount of the estimated uncollectible accounts ($6,500 - $1,200 = $5,300). Therefore, the entry would be a debit to Bad Debts Expense for $5,300 and a credit to Allowance for Doubtful Accounts for $5,300.

An Aging of a Company's Accounts Receivable Indicates That $6,500