Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for Bad Debt Expense?
A) debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
B) debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000
C) debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800
D) debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800

Question

Quizplus · Accepted Answer

The correct entry is to debit Bad Debt Expense for $14,000 and credit Allowance for Doubtful Accounts for $14,000. This will increase the Allowance for Doubtful Accounts to $15,000, which is the estimated amount of uncollectible receivables.

Allowance for Doubtful Accounts Has a Debit Balance of $1,100