Final answer:
The allowance method for recognizing uncollectible accounts receivable will have a positive balance at the end of the period if bad debts are estimated.
Step-by-step explanation:
The correct answer is b. Bad debts are estimated.
When the allowance method for recognizing uncollectible accounts receivable is used, the allowance account is created to offset the potential losses from uncollectible accounts. The allowance account is increased by recording an estimated expense for bad debts based on the company's past experiences and industry standards. As a result, the allowance account will have a positive balance at the end of the period.
For example, if a company estimates that 5% of its accounts receivable will be uncollectible, it will create an allowance account with 5% of the total accounts receivable as its balance. This allows the company to reflect the potential losses from uncollectible accounts on its financial statements.