Question

A company uses the Aging of Receivables Method to estimate that $15,750 of Accounts Receivable will...

A company uses the Aging of Receivables Method to estimate that $15,750 of Accounts Receivable will be uncollectable. Before adjustment, the Allowance for Doubtful Accounts had a Credit balance of $375. What adjusting entry should the Company make at period end?

Question 10 options:

Debit Bad Debt Expense $15,750 and Credit Allowance for Doubtful Accounts $15,750.

Debit Bad Debt Expense $16,125 and Credit Allowance for Doubtful Accounts $16,125.

Debit Bad Debt Expense $15,375 and Credit Allowance for Doubtful Accounts $15,375.

Debit Accounts Receivable $15,750 and Credit Sales $15,750.
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Answer #1

Correct answer--------------Debit Bad Debt Expense $15,375 and Credit Allowance for Doubtful Accounts $15,375.

Working

Estimated balance of allowance for uncollectables $      15,750.00 Cr
Less: Balance in Allowance for uncollectable account (Cr) $            375.00 Cr
Total bad debts to be recorded $      15,375.00 Cr

The entry will look look this

Transaction General Journal Debit Credit
1 Bad debts expense $        15,375.00
        Allowance for doubtful accounts $       15,375.00
(To record bad debts expense)
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