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 $21,000 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $550. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
A.
| Bad Debts Expense | 20,450? | |
| Allowance for Doubtful Accounts | 20,450? |
B.
| Accounts Receivable | 21,550? | |
| Allowance for Doubtful Accounts | 21,550? |
C.
| Bad Debts Expense | 21,000? | |
| Allowance for Doubtful Accounts | 21,000? |
D.
| Accounts Receivable | 21,000? | |
| Bad Debts Expense | 550? | |
| Sales | 21,550? |
E.
| Bad Debts Expense | 21,550? | |
| Allowance for Doubtful Accounts | 21,550? |
Answer: E
Business
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