Problem:
Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000.
Required:
Which of the following entries records the proper adjusting entry for bad debt expense?
- Debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600
- Debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600
- Debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600
- Debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400
Note: Please show the work not just the answer.