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At the end of the year, Mark Inc. estimates future bad debts to be $6,500. The Allowance for Uncollectible Accounts has a credit balance of $2,500 before any year‐end adjustment. What adjustment should Mark Inc. record for the estimated bad debts at the end of the year?

A. Debit Bad Debt Expense, $6,500; credit Allowance for Uncollectible Accounts, $6,500

B. Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts $4,000

C. Debit Allowance for Uncollectible Accounts, $9,000; credit Bad Debt Expense, $9,000

D. Debit Bad Debt Expense, $9,000; credit Allowance for Uncollectible Accounts, $9,000

Respuesta :

Answer:

B. Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts $4,000

Explanation:

The journal entry to record the bad debt expense is shown below:

Bad debt expense A/c Dr  $4,000

 To Allowance for doubtful debts $4,000

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= Estimated future bad debts - credit balance of Allowance for Doubtful Accounts)

= $6,500 - $2,500

= $4,000

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