At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $760. During the year, $120 of previously written-off accounts were reinstated and accounts totaling $740 are written-off as uncollectible. The end of the year balance (before adjustment) in the Allowance for Doubtful Accounts should be
A) $760
B) $120
C) $140
D) $740

Question

Quizplus · Accepted Answer

The beginning balance of the Allowance for Doubtful Accounts was $760. 
$120 of previously written-off accounts were reinstated, reducing the balance to $640 ($760 - $120 = $640). 
Then, $740 of accounts were written off, which exceeds the initial beginning balance of $760, so the balance in the allowance account will be completely used up, and an additional $140 ($740 - $600) will be written off to bad debt expense. 
Therefore, the end of the year balance (before adjustment) in the Allowance for Doubtful Accounts should be $0 + $140 = $140, which is option C.

At the Beginning of the Year, the Balance in the Allowance