Question

An aging of a company's accounts receivable indicates that $3140 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $820 debit balance, the adjustment to record bad debts for the period will require a:__________
a. debit to Bad Debt Expense for $3140.
b. credit to Allowance for Doubtful Accounts for $820.
c. debit to Bad Debt Expense for $3960.
d. debit to Bad Debt Expense for $2320.

Answer 1

Answer:

c. debit to Bad Debt Expense for $3960.

Explanation:

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

Bad debt expense Dr ($3,140 + $820)   $3,960

         To Allowance for doubtful debts $3,960

(Being the bad debt expense is recorded)

For recording this we debited the bad debt expense as it increased the expenses and credited the allowance for doubtful debts as it decreased the assets

Therefore option c is correct