PRC-1 · Chapter 5 · Question 6 of 100
What is the correct journal entry to record a year-end INCREASE in the general allowance for doubtful debts?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Debit Bad Debt Expense, Credit Allowance for Doubtful Debts
Explanation
Increasing the allowance requires recognizing a further estimated loss for the period (Debit Bad Debt Expense) and increasing the contra-asset balance (Credit Allowance for Doubtful Debts).
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