Question

If the Allowance for Doubtful Accounts has a $1,000 debit balance prior to making the end-of-period adjusting entry for bad debts using the aging of accounts receivable method, then it must mean that the ______. Multiple choice question. direct write-off method was used debit to Bad Debt Expense will be $1,000 less than if the Allowance balance had been $0 aging method was used debit to Bad Debt Expense will be $1,000 more than the desired ending balance in the Allowance for Doubtful Accounts sales method was used

Answer 1

The debit to Bad Debt Expense must be $1,000 greater than the desired ending balance in the Allowance for Doubtful Accounts if the Allowance for Doubtful Accounts has a $1,000 debit amount before the end-of-period adjustment entry for bad debts is made using the aging of accounts receivable technique.

What is an expense for bad debt?

When a receivable is no longer recoverable as a result of a customer's inability to pay an outstanding debt owing to bankruptcy or other financial issues, a bad debt expense is recorded.

What are some illustrations of bad debt costs?

Big Store stops paying its debts and fails to reimburse Company XYZ for goods valued at $100,000. Because the business is skeptical that Big Store would ever pay, it classifies the $100,000 as a bad debt.

Is a bad debt a cost or a loss?

When a customer's repayment of previously granted credit is thought to be uncollectible and is therefore recorded as a charge off, a business incurs a bad debt expense.

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