An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a
A) debit to Allowance for Doubtful Accounts for $3,200.
B) debit to Bad Debt Expense for $3,200.
C) debit to Allowance for Doubtful Accounts for $4,000.
D) credit to Allowance for Doubtful Accounts for $4,000.

Question

Quizplus · Accepted Answer

The adjustment is to record the bad debt expense for the period, and the estimate of uncollectible accounts is $4,000. Since the Allowance for Doubtful Accounts already has a credit balance of $800, the necessary adjustment will be a debit to the Bad Debt Expense account for the difference of $3,200 ($4,000 - $800). Therefore, the correct answer is B - Debit to Bad Debt Expense for $3,200.

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