To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a debit to
A)Accounts Receivable and a credit to Allowance for Doubtful Accounts.
B)Bad Debts Expense and a credit to Allowance for Doubtful Accounts.
C)Allowance for Doubtful Accounts and a credit to Accounts Receivable.
D)Bad Debts Expense and a credit to Accounts Receivable.

Question

Quizplus · Accepted Answer

The correct adjusting entry for recording estimated uncollectible accounts using the allowance method is a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts. This entry increases the expense for bad debts and also increases the allowance for doubtful accounts, which is a contra account to Accounts Receivable, without directly reducing the balance of Accounts Receivable.

To Record Estimated Uncollectible Accounts Using the Allowance Method, the Adjusting