Question

Indy Sport and Hobby's Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad-Debts Expense includes a
Question 3 options:

credit to the Bad-Debt Expense account for $500.

credit to the Bad-Debts Expense account for $1,300.

debit to the Bad-Debts Expense account for $900.

debit to the Bad-Debts Expense account for $500.

Answer 1

I can give you a fact that it's not A or B because that would mean a decrease in expenses (Using the Dr. Cr. Rules). But between C and D I would have to go with D. Sorry if I fail your quiz :(

Answer 2

The correct answer is D.