When using the allowance method of accounting for uncollectible accounts, the entry to record the estimated bad debts expense is a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts. t/f

True.

Explanation:

At the end of an accounting period a business analyses what portion of its recievables have gone bad (that is the amount that is uncollectible). This is called bad expense.

Bad expense is treated by two methods. The direct write-off method and the allowance method.

Allowance method involves use of a contra asset account. It is preferred because the contra account has no effect on income statement accounts and is does not affect reported revenue.

Journal entry passed includes a debit to bad debt expense, and a credit to allowance for doubtful accounts.