The Allowance for Doubtful Accounts is a contra asset account that equals:

• A. the amount of credit sales made during the period
• B. the estimated amount of accounts receivable that is expected to be uncollectible
• C. the cash collected from customers during the period
• D. the total amount of accounts receivable outstanding

Answer: (B)

Verified step by step guidance

1. Understand the concept of a contra asset account: A contra asset account is used to reduce the balance of a related asset account. In this case, the Allowance for Doubtful Accounts reduces the Accounts Receivable balance to reflect the amount expected to be collectible.
2. Recognize the purpose of the Allowance for Doubtful Accounts: It represents the estimated amount of accounts receivable that is expected to be uncollectible due to customers' inability or unwillingness to pay.
3. Eliminate incorrect options: The Allowance for Doubtful Accounts is not directly related to the amount of credit sales made during the period, nor is it tied to the cash collected from customers. These are separate financial metrics.
4. Clarify the relationship with Accounts Receivable: The Allowance for Doubtful Accounts is subtracted from the total Accounts Receivable to calculate the net realizable value of receivables, which is the amount expected to be collected.
5. Conclude the correct answer: The Allowance for Doubtful Accounts equals the estimated amount of accounts receivable that is expected to be uncollectible, as this aligns with its purpose and function in financial accounting.