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

Question

Quizplus · Accepted Answer

The correct adjusting entry for recording estimated uncollectible accounts using the allowance method involves debiting Bad Debts Expense and crediting Allowance for Doubtful Accounts. This reflects the expected loss from uncollectible accounts as an expense and increases the allowance for doubtful accounts, which is a contra-asset account that reduces the total accounts receivable balance on the balance sheet.

To Record Estimated Uncollectible Accounts Using the Allowance Method for Uncollectible