Final answer:
The adjusting entry for bad debts at Deborah company is $130,000 (option B). This is because the estimated uncollectible accounts are $180,000, and there is already a $50,000 credit in the allowance account. The difference is the required adjustment.
Step-by-step explanation:
The question revolves around the calculation of the adjusting entry for bad debts in Deborah company's financial records as of December 31. The account balances given are Accounts Receivable of $2,100,000, and a credit balance in Allowance for Doubtful Accounts of $50,000. According to the aging of accounts receivable, $180,000 is expected to become uncollectible.
To adjust the Allowance for Doubtful Accounts to reflect the expected uncollectible accounts, you subtract the existing credit balance in the allowance account from the estimated uncollectible accounts. The adjusting entry for bad debts is calculated as follows: Needed allowance ($180,000) - Existing allowance ($50,000) = Adjusting entry for bad debts ($130,000).
The correct amount of the adjusting entry to record the estimated uncollectible accounts receivable is $130,000, which is option B.