From aging its Accounts Receivable, Marlon De Guzman Company estimates that 18,750 of it's accounts will be uncollectible. At this time, Allowance for Doubtful Accounts has an 8,400 credit balance. The adjusting entry is. A. Debit allowance for doubtful accounts, 18,750; credit accounts receivable, 18,750. B. Debit doubtful accounts expense, 10,350; credit allowance for doubtful accounts, 10,350 C. Debit doubtful accounts expense, 18,750; credit accounts receivable 18,750 D. Debit allowance for doubtful accounts, 10,350; credit doubtful accounts expense, 10,350 (Which one is correct)
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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