When Customers Buy Goods on Credit and Are Allowed a Certain

Multiple Choice

When customers buy goods on credit and are allowed a certain period of time to pay for their purchases, companies need to consider that some customers may not pay their bills. When a company estimates that some purchases will go unpaid, the company should:

A) Credit Bad debt expense and debit Allowance for uncollectible accounts
B) Debit Bad debt expense and a credit a contra-asset account called Allowance for uncollectible
Accounts
C) Debit Bad debt expense and credit Accounts receivable
D) Debit revenues and credit Costs of goods sold