Based on the Following Information If Bad Debts Are Estimated to Be 1 1/2% of

question 78

Multiple Choice

Based on the following information: $\begin{array}{ll}\text { Credit sales } & \$ 172,000 \\\text { Collections on accounts receivable during the year } & 170,000 \\\text { Cash sales } & 810,000 \\\text { Unadjusted balance in Allowance for Doubtful Accounts } & 40 \\\text { Sales returns and allowances for credit sales } & 2,000 \\\text { Accountsreceivable, beginning of the year } & 14,000\end{array}$ If bad debts are estimated to be 1 1/2% of ending accounts receivable, the adjusting entry to recognize bad debts will include a debit to Bad Debt Expense for

• A)$170
• B)$190
• C)$210
• D)$250

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Definitions:

Car Loan

A financial loan specifically used to purchase a car, typically secured against the vehicle itself and paid back over a set period.

First Payment

The initial payment made in a series of payments, commonly referring to the first installment of a loan or lease.

Compounded Semi-Annually

Calculation of interest where the amount is recalculated and added to the principal every six months.

First Three Years

The initial period of time covering three consecutive years, often cited in contexts of growth, development, or performance assessment.