When a company uses the allowance method to measure bad debts, ________.

Question:When a company uses the allowance method to measure bad debts, ________.

1.The Allowance for Bad Debts account balance is added to the balance of the Accounts Receivable account to arrive at the net realizable value

2.The amount of bad debts expense is estimated at the end of the accounting period

3.The Allowance for Bad Debts account is debited when the bad debts expense is estimated

4.The Bad Debts Expense account is debited when an account is written off

Answer:2