An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,600 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 $2,900.
C) debit to Bad Debt Expense for $2,900.
D) credit to Allowance for Doubtful Accounts for $4,500.

Question

Quizplus · Accepted Answer

The adjustment needed is to bring the Allowance for Doubtful Accounts to the estimated uncollectible amount of $4,500. Since there is already a $1,600 credit balance, an additional $2,900 is needed, so you debit Bad Debt Expense for $2,900.

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