An aging of a company's accounts receivable indicates that $4,500 are 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 Debt Expense for $4,500.
B) debit to Allowance for Doubtful Accounts for $3,300.
C) debit to Bad Debt Expense for $3,300.
D) credit to Allowance for Doubtful Accounts for $4,500.

Question

Quizplus · Accepted Answer

The adjustment needed is the difference between the estimated uncollectible amount ($4,500) and the existing credit balance in the Allowance for Doubtful Accounts ($1,200), which is $3,300. Therefore, a debit to Bad Debt Expense for $3,300 is required.

An Aging of a Company's Accounts Receivable Indicates That $4,500