Question

Shown below are several accounts from a company's ledger with each account preceded by an identification number, and a transaction completed by this company. Indicate the number corresponding to the account debited and the number corresponding to the account credited when journalizing this transaction.

1. Accounts payable
2. Accounts receivable
3. Allowance for doubtful accounts
4. Bad debt expense
5. Cash
6. Factoring Fee Expense
7. Interest earned
8. Interest expense
9. Interest receivable
10. Notes payable
11. Notes receivable
12. Sales

Transaction - Made the bad debt adjustment at the end of the year using the allowance method. The number corresponding to the account debited is ______________ and the number corresponding to the account credited is _______________.

Answer 1

The bad debt adjustment using the allowance method involves debiting the Bad Debt Expense and crediting the Allowance for Doubtful Accounts. However, without the full list of ledger account numbers, the specific numbers for these accounts cannot be determined.

Step-by-step explanation:

When making the bad debt adjustment at the end of the year using the allowance method, the account that is typically debited is the Bad Debt Expense account. This entry reflects the estimated amount of receivables that will not be collected. On the other side, the account credited is the Allowance for Doubtful Accounts, which is a contra asset account that offsets Accounts Receivable. The transaction does not immediately debit the specific customer's account because it's an estimation of bad debt across all receivables.

The number corresponding to the account debited, in this case, is not provided in the list of accounts. Usually, the Bad Debt Expense would have its own specific number in the general ledger. Similarly, the number for the Allowance for Doubtful Accounts is not provided. Therefore, without the complete list of ledger accounts and their corresponding numbers, we cannot definitively indicate the number for the accounts debited and credited.