Question

An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $4,937.
If Allowance for Doubtful Accounts has a $1,250 credit balance, the adjustment to record the bad debt expense for the period will require a:

a. debit to Bad Debt Expense for $4,937.
b. debit to Allowance for Doubtful Accounts for $3,687.
c. debit to Bad Debt Expense for $3,687.
d. credit to Allowance for Doubtful Accounts for $4,937.

Answer 1

Answer:

c. debit to Bad Debt Expense for $3,687.

Explanation:

The journal entry to record the bad debt expense is shown below:

Bad debt expense A/c Dr  $3,687

             To Allowance for doubtful debts $3,687

(Being bad debt expense is recorded)  

The computation is shown below:

= Estimation of the uncollectible receivable - credit balance in allowance for doubtful debts

= $4,937 - $1,250

= $3,687