The Allowance for Bad Debts account has a debit balance of $6,000 before the adjusting entry for bad debt expense. After analyzing the accounts in the accounts receivable subsidiary ledger, the company's management estimates that uncollectible accounts will be $10,000. What will be the amount of the adjustment in the Allowance for Bad Debts account?
A)$15,250
B)$10,000
C)$14,900
D)$16,000

Question

Quizplus · Accepted Answer

The adjustment needed is $16,000 because the Allowance for Bad Debts account needs to reflect the estimated uncollectible amount of $10,000. Since it currently has a debit balance of $6,000, an adjustment of $16,000 is required to bring it to a $10,000 credit balance.

The Allowance for Bad Debts Account Has a Debit Balance