An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a
A) debit to Bad Debt Expense for $8,600.
B) debit to Bad Debt Expense for $7,900.
C) debit to Bad Debt Expense for $7,200.
D) credit to Allowance for Doubtful Accounts for $700.

Question

Quizplus · Accepted Answer

The adjustment needed is the difference between the estimated uncollectible amount ($7,900) and the existing credit balance in the Allowance for Doubtful Accounts ($700), which is $7,200. Therefore, a debit to Bad Debt Expense for $7,200 is required.

An Aging of a Company's Accounts Receivable Indicates the Estimate