Allowance for Doubtful Accounts Journal Entries

Allowance for Doubtful Accounts journal entries involve debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts. Bad Debt Expense represents the estimated amount of accounts receivable that may not be collectible, recorded as an expense on the income statement. The Allowance for Doubtful Accounts, a contra-asset account on the balance sheet, offsets the accounts receivable to reflect the net realizable value accurately, ensuring financial statements depict potential losses from uncollectible accounts.