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

question 37

Multiple Choice

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

• A) Accounts Receivable and a credit to Allowance for Doubtful Accounts.
• B) Bad Debts Expense and a credit to Allowance for Doubtful Accounts.
• C) Allowance for Doubtful Accounts and a credit to Accounts Receivable.
• D) Bad Debts Expense and a credit to Accounts Receivable.

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Definitions:

Direct Write-Off Method

The direct write-off method is an accounting practice of charging unpaid debts directly to expense when they are deemed uncollectible, bypassing the allowance for doubtful accounts.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's receivables are collected, or turned over, during a reporting period.

Bad Debt Expense

An expense account reflecting amounts that are expected to be uncollectible from customers' credit sales.

Bad Debt Expense

An estimated expense that represents the amount of receivables a company does not expect to collect due to customer defaults.