The adjustment will include a credit to Allowance to doubtful debt.
Bad debt are used to describe any outstanding balances owed by individual or firms, which are deemed no longer recoverable and thus, must be written off on account.
Bad debt are also referred to as Contra-assets because it reduces the value of company's asset.
When recording an estimate of bad debt, typically, the Bad Debt Expense will be increased by Debit while the Allowance for Doubtful Accounts will increased by Credit.
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