To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a
A) debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts
B) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts
C) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable
D) debit to Loss on Credit Sales and a credit to Accounts Receivable

Question

Quizplus · Accepted Answer

The allowance method involves estimating the amount of uncollectible accounts and recording that amount as Bad Debt Expense, which is a debit. The offsetting credit goes to Allowance for Doubtful Accounts, which is a contra asset account. This creates a reserve that reflects the company's best estimate of the amount of its accounts receivable that ultimately will not be collected. Therefore, the adjusting entry would be a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts.

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