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An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a(A) debit to Bad Debt Expense for $8,600(B) debit to Bad Debt Expense for $7,900(C) debit to Bad Debt Expense for $7,200(D) credit to Allowance for Doubtful Accounts for $700

Respuesta :

Answer:

The correct option here would be C) debiting the amount $7200 to bad debt expense account.

Explanation:

The total un collectible receivables are $7900, so this amount would go the bad debt expense account but here additional information is also given regarding credit balance of $700 is available in allowance for doubtful debts, which means a provision was made for bad debts, so we will subtract these $700 from total un collectible receivables to see how much of the amount left would be un collectible.

$7900 - $700

= $7200

JOURNAL ENTRY -

  SN           PARTICULAR                 LF                DEBIT             CREDIT

  1               Bad debt expense                            $7200                                                            

                  To allowance for                                                          $7200

                   doubtful debts

              ( amount un recoverable )

Here SN means serial number and LF means ledger folio .

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