Asked by Elena Contreras on May 13, 2024
Verified
Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year (before adjustment) . The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the bad debt expense for the year?
A) debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600
B) debit Allowance for Doubtful Accounts, $43,200; credit Bad Debt Expense, $43,200
C) debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200
D) debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600
Allowance for Doubtful Accounts
A contra asset account that represents an estimate of the amount of accounts receivable that may not be collectible.
Uncollectible Accounts
Accounts receivable that a company has deemed unlikely to be collected and thus written off as a loss.
Adjusting Entries
Journal entries made at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred.
- Determine the projected amount of uncollectible accounts using the percentage of sales method and receivables analysis approach.
- Detail the practices for forecasting, updating, and dismissing uncollectible accounts receivable through journal documentation.
Verified Answer
Learning Objectives
- Determine the projected amount of uncollectible accounts using the percentage of sales method and receivables analysis approach.
- Detail the practices for forecasting, updating, and dismissing uncollectible accounts receivable through journal documentation.
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