Question

At the end of the year, Dahir Incorporated’s balance of Allowance for Uncollectible Accounts is $2,400 (credit) before adjustment.

The company estimates future uncollectible accounts to be $12,000.

What adjustment would Dahir record for Allowance for Uncollectible Accounts?

Answer 1

The adjustment Dahir would record for Allowance for Uncollectible Accounts:

Debit Bad debts expense $9,600

Credit Allowance for Doubtful Accounts $9,600

Step-by-step explanation:

At the end of the year, before adjustment, Dahir Incorporated’s balance of Allowance for Uncollectible Accounts is $2,400 (credit).

The company estimates uncollectible accounts to be $12,000

Bad debts expense = $12,000 - $2,400 = $9,600

The adjustment to record Allowance for Uncollectible Accounts:

Debit Bad debts expense $9,600

Credit Allowance for Doubtful Accounts $9,600