Allowance for Doubtful Accounts has a credit balance of $1,402 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,750. Which of the following entries records the proper adjustment for bad debt expense? O a. debit Bad Debt Expense, $18,348; credit Allowance for Doubtful Accounts, $18,348 b. debit Allowance for Doubtful Accounts, $18,348; credit Bad Debt Expense, $18,348 O c. debit Allowance for Doubtful Accounts, $21,152; credit Bad Debt Expense, $21,152 O d. debit Bad Debt Expense, $21,152; credit Allowance for Doubtful Accounts, $21,152
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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