Question

An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $4,155. If the allowance for doubtful accounts has a $1,059 credit balance, the adjustment to record the bad debt expense for the period will require:

a. Debit to bad debt expense for $1,059.
b. Credit to allowance for doubtful accounts for $4,155.
c. Debit to bad debt expense for $4,155.
d. Debit to bad debt expense for $3,096.

Answer 1

The adjustment to record the bad debt expense for the period will require a debit to bad debt expense for $3,096.

Step-by-step explanation:

The adjustment to record the bad debt expense for the period will require a debit to bad debt expense for $3,096.

To calculate the adjustment, we need to determine the amount of uncollectible receivables after considering the credit balance in the allowance for doubtful accounts. We can do this by subtracting the credit balance ($1,059) from the estimated uncollectible receivables ($4,155). The result is $3,096, which represents the bad debt expense for the period. Since the bad debt expense increases the expense, we need to debit the bad debt expense account.