At December 31, before adjusting and closing the accounts had occurred, the Allo

Question

At December 31, before adjusting and closing the accounts had occurred, the Allowance for Doubtful Accounts of Mubera Corporation showed a debit balance of $2,000. An aging of the accounts receivable inidcated the amount probabaly uncollected to be $10,000. Under these circumstances, a year-end adjusting entry for estimated bad debts would include a:

A) Debit to Bad Debts Exspense of $12,000
B) Debit to the Allowance for Doubtful Accounts for $2,000
C) Credit to the Allowance for Doubtful Accounts for $8,000
D) Debit to Bad Debit Exspense of $10,000
E) None of the above

Explanation / Answer

Mubera Corporation Details Amt $ Dr /Cr Dec 31 Debit balance in Allowance for Doubtful A/cs before adjustment              2,000 Dr Required Credit Balance in Allowance for Doubtful A/Cs           10,000 Cr Additional Allowance for Doubtful Accounts Required           12,000 Cr So Bad Debt Expense to be recorded for the year           12,000 Dr Therefore option A is correct.

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