Monro IncUses the Accrual Method of Accounting

question 18

Multiple Choice

Monro Inc.uses the accrual method of accounting.Here is a reconciliation of Monro's allowance for bad debts for the current year. Which of the following statements is true?

• A)Bad debt expense per books and the deduction for bad debts is $69,650.
• B)Bad debt expense per books and the deduction for bad debts is $88,500.
• C)Bad debt expense per books is $80,000,and the deduction for bad debts is $88,500.
• D)Bad debt expense per books is $88,500,and the deduction for bad debts is $80,000.

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Definitions:

Standard Deduction

The fixed amount the IRS allows taxpayers to subtract from their taxable income if they do not itemize deductions, differing by filing status.

Exemption

A provision that reduces or eliminates a taxpayer's obligation to pay tax, typically based on certain conditions or qualifications.

Tax Bill

A statement from a government authority specifying the amount of tax owed by an individual or entity.

Proration

The allocation or division of financial amounts based on a proportionate distribution, often applied in billing, refunds, or dividends.