You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to debit Allowance for Doubtful Accounts and credit Accounts Receivable. debit Bad Debt Expense and credit Accounts Receivable. debit Allowance for Doubtful Accounts and credit Bad Debt Expense. debit Bad Debt Expense and credit Allowance for Doubtful Accounts