Allowance for Doubtful Accounts Has a Debit Balance of $800

question 121

Multiple Choice

Allowance for Doubtful Accounts has a debit balance of $800 at the end of the year (before adjustment) , and an analysis of accounts in the customers ledger indicates uncollectible receivables of $15,000. Which of the following entries records the proper adjusting entry for bad debt expense?

• A) debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800
• B) debit Bad Debt Expense, $14,200; credit Allowance for Doubtful Accounts, $14,200
• C) debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800
• D) debit Bad Debt Expense, $15,800; credit Allowance for Doubtful Accounts, $15,800

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Definitions:

Natural Gestures

Movements or signals made with the body that are instinctive or spontaneously generated, often used in communication.

Pace Back

A movement or action where one walks back and forth in a confined area, often indicating thought or anxiety.

Nonsecured Debt

A type of debt that is not backed by collateral, meaning the lender does not have a claim on any specific asset of the borrower if the debt is unpaid.

Bankruptcy Action

A legal proceeding involving a person or business that is unable to repay outstanding debts.