Question

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when A. a customer’s account becomes past due.B. an account becomes bad and is written off.C. a sale is made.D. management estimates the amount of uncollectibles

Answer 1

Answer:

Option D. management estimates the amount of uncollectibles

Explanation:

When the company estimates the bad debts, reflects it in the balance sheet through a Debit entry in the Bad Debt Expenses againts the asset account Allowance for Doubtful Accounts as a Credit.

When the bad debt are confirm as uncollectible the loss is reflected in the Account Receivable as a Credit with the correspondent debit entry in the Allowance for Doubtful Accounts.