To Record Estimated Uncollectible Accounts Using the Allowance Method, the Adjusting

question 214

Multiple Choice

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

• A) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
• B) debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts.
• C) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
• D) debit to Loss on Credit Sales and a credit to Accounts Receivable.

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Definitions:

Adjusting Entries

At the end of an accounting interval, journal entries are made for the allocation of profits and expenses to the time frame in which they were genuinely incurred.

Prepaid Expenses

Payments made in advance for goods or services that will be used in the future, recorded as assets on the balance sheet until they are consumed.

Accrued Salaries

Salaries that have been incurred (earned by employees) but not yet paid by the employer.

Estimated Depreciation

The projection of an asset’s decrease in value over time due to wear and use, used for accounting and tax purposes.