To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a
A) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
B) debit to Bad Debts Expense 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 requires recording an estimated amount of uncollectible accounts as an expense in the current period. This is done through a debit to the Bad Debts Expense account and a credit to the Allowance for Doubtful Accounts. This allows for a more accurate representation of the company's accounts receivable balance on the balance sheet. Option A is incorrect because it would increase the amount of Accounts Receivable, which would be the opposite of the desired effect. Option C is incorrect because it would decrease the amount of Accounts Receivable, which is not the goal of the adjusting entry. Option D is incorrect because it mentions a "Loss on Credit Sales" account, which is not a standard account used in the allowance method.

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