Question

A company estimates that $1,000 of its accounts receivable is uncollectible at the end of the period and will make the following adjusting entry: (Check all that apply.)

(A) Debit Bad Debt Expense
(B) Credit Allowance for Doubtful Accounts
(C) Debit Accounts Receivable
(D) Credit Cash

Answer 1

The adjusting entry for recording uncollectible accounts would involve debiting Bad Debt Expense, crediting Allowance for Doubtful Accounts, and debiting Accounts Receivable.

Step-by-step explanation:

The company's estimate of $1,000 of its accounts receivable being uncollectible at the end of the period requires an adjusting entry that correctly reflects this estimation. The adjusting entry to record the uncollectible accounts would be:

1. (A) Debit Bad Debt Expense - This entry recognizes the expense of uncollectible accounts, which increases the company's expenses.
2. (B) Credit Allowance for Doubtful Accounts - This entry reduces the balance in the Allowance for Doubtful Accounts, which is a contra asset account used to estimate the uncollectible accounts.
3. (C) Debit Accounts Receivable - This entry reduces the Accounts Receivable balance by the estimated amount of uncollectible accounts.