Question

At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible. Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a: Multiple choice question. debit to Allowance for Doubtful Accounts and credit to Bad Debts Expense debit to Accounts Receivable and credit to Bad Debts Expense debit to Bad Debts Expense and credit to Accounts Receivable debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts

Answer 1

Answer:

debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts

Explanation:

The journal entry needed to record the adjusting entry by using the allowance method is given below:

Bad debt expense    

                 To Allowance for doubtful debts

(Being bad debt expense is recorded)

Here the bad debt expense is debited as it increased the expense and credit the allowance as it decreased the assets