Describe the relationship between the Bad Debts Expense Account and Allowance for Doubtful Accounts when recording bad debts.

Description of the relationship should include the following:

• Bad Debts Expense Account—an operating expense account that estimates the amount of credit sales or receivable balance unlikely to be collected during a given time period
• Allowance for Doubtful Accounts—a contra-asset account that accumulates the expected future amount of bad debts as of a given date; it normally has a credit balance and offsets the Accounts Receivable Account