The two accounts used to adjust the uncollectible accounts are.
A) Uncollectible Accounts Expense and Allowance for Uncollectible Accounts.
B) Accounts Receivable and Uncollectible Accounts Expense.
C)Accounts Receivable and Allowance for
Uncollectible Accounts .
D)Accounts Receivable and Accounts Receivable Expense.
Answer is (A) is it right?
Yes, the correct answer is A) Uncollectible Accounts Expense and Allowance for Uncollectible Accounts.
To understand why, let's break it down:
Uncollectible Accounts refer to accounts receivable that a company does not expect to receive payment for. These can be customer accounts that become uncollectible due to non-payment or financial difficulties.
1. Uncollectible Accounts Expense: This account is used to record the estimated amount of uncollectible accounts for a given period. It is an expense account that represents the cost to the company of extending credit to customers who are not able to pay.
2. Allowance for Uncollectible Accounts: This account is a contra-asset account that represents the estimated amount of uncollectible accounts receivable. It is used to reduce the value of accounts receivable on the balance sheet to reflect the anticipated losses due to uncollectible accounts.
So, when adjusting for uncollectible accounts, the company would record an increase in the Uncollectible Accounts Expense (debit) to recognize the expense and a corresponding increase in the Allowance for Uncollectible Accounts (credit) to reflect the reduction in the value of accounts receivable.
Therefore, option A) Uncollectible Accounts Expense and Allowance for Uncollectible Accounts is the correct choice.