A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $33,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $555. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
A.
| Accounts Receivable | 34,305? | |
| Allowance for Doubtful Accounts | 34,305? |
B.
| Bad Debts Expense | 33,195? | |
| Allowance for Doubtful Accounts | 33,195? |
C.
| Accounts Receivable | 33,750? | |
| Bad Debts Expense | 555? | |
| Sales | 34,305? |
D.
| Bad Debts Expense | 33,750? | |
| Allowance for Doubtful Accounts | 33,750? |
E.
| Bad Debts Expense | 34,305? | |
| Allowance for Doubtful Accounts | 34,305? |
Answer: B
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