Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?
A) debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
B) debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000
C) debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800
D) debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800

Question

Quizplus · Accepted Answer

The correct adjustment requires adding $14,000 to the Allowance for Doubtful Accounts to offset its existing $1,100 debit balance and reach the desired $12,900 credit balance. This is done by debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts for $14,000.

Allowance for Doubtful Accounts Has a Debit Balance of $1,100