Under the allowance method for estimating uncollectible (doubtful) accounts: a closing entry war transfer the balance in Allowance for Doubtful Accounts to Retained Eamings at the end of the accounting period. Bod Debit Experize witt be netted with Accounts Recelvable to determine Net Realfable Vatue. a company credits the Allowance for Doubtful Accounts when it is determined a customer cannot pay its balance. Bad Debt Expense is recorded in the period that revenue is recognized