Assume the following unadjusted account balances at the end of the accounting period for Chocolate Brownie Palace: Accounts Receivable, $90,000; Allowance for Doubtful Accounts, $1,000 (credit balance); and Sales revenue $600,000. If Chocolate Brownie Palace ages the accounts and determines that $5,000 of receivables may be uncollectible, the adjusting entry should be: Group of answer choices Bad Debts Expense 3,000 Allowance for Doubtful Accounts 3,000 Bad Debts Expense 5,000 Accounts Receivable 5,000 Bad Debts Expense 4,000 Allowance for Doubtful Accounts 4,000 Bad Debts Expense 5,000 Allowance for Doubtful Accounts 5,000
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.
Assume the following unadjusted account balances at the end of the accounting period for Chocolate Brownie Palace:
If Chocolate Brownie Palace ages the accounts and determines that $5,000 of receivables may be uncollectible, the
Allowance for Doubtful Accounts 3,000
Bad Debts Expense 5,000
Accounts Receivable 5,000
Bad Debts Expense 4,000
Allowance for Doubtful Accounts 4,000
Bad Debts Expense 5,000
Allowance for Doubtful Accounts 5,000
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