A company has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $1,200. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for $6,000.
Answer the following statement true (T) or false (F)
True
| Desired balance in allowance: | $80,000 × .06 = | $ | 4,800 | credit |
| Current balance in allowance: | 1,200 | debit | ||
| Adjustment to allowance: | $ | 6,000 | credit |
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