Teller Inc

question 54

Multiple Choice

Teller Inc. reported an allowance for doubtful accounts of $30,000 (credit) at December 31, 2011, before performing an aging of accounts receivable. As a result of the aging, Teller Inc. determined that an estimated $52,000 of the December 31, 2011, accounts receivable would prove uncollectible. The adjusting entry required at December 31, 2011, would be

• A) Doubtful Accounts Expense ........... 22,000 Allowance for Doubtful Accounts ... 22,000
• B) Allowance for Doubtful Accounts ..... 22,000 Accounts Receivable ............... 22,000
• C) Doubtful Accounts Expense ........... 52,000 Allowance for Doubtful Accounts ... 52,000
• D) Allowance for Doubtful Accounts ..... 52,000 Doubtful Accounts Expense ......... 52,000

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Definitions:

Preparation Costs

Expenses incurred in getting assets or products ready for use or sale.

Sales Tax

A government-imposed tax on sales of goods and services, collected by retailers at the point of sale and then passed on to the government.

Transportation Costs

Expenses incurred in the process of moving goods from one location to another, including freight, shipping, and handling fees.

Computer Equipment

The physical hardware and devices used for computing processes, such as servers, desktops, laptops, and related peripherals.