Autojor Company estimated bad debt expense for the year to be $21,000. Which debit or credit is included in the adjusting entry to record bad debt expense for the year?

• Credit Accounts Receivable for $21,000.

• Debit Accounts Receivable for $21,000.

• Debit Allowance for Bad Debts for $21,000.

• Credit Allowance for Bad Debts for $21,000. (Correct)

I am confused at the difference in "bad debt expense" and "allowance for bad debt". Please explain that. And are these two terms only interchangeable when its referring to "adjusting entries"?

Bad Debt Expense		21,000
Allowance for Bad Debts				21,000