You Have Just Received Notice That a Customer of Yours

question 44

Multiple Choice

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments.Assuming you use the allowance method, the entry you make is to

• A)debit Allowance for Doubtful Accounts and credit Bad Debt Expense.
• B)debit Allowance for Doubtful Accounts and credit Accounts Receivable.
• C)debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
• D)debit Bad Debt Expense and credit Accounts Receivable.

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Definitions:

Wages Payable

A liability account that represents the amount of wages owed to employees for work that has been performed but not yet paid.

Unearned Rent

Income received for rent that has not yet been earned because the rental period has not taken place.

Account Group

A classification system in accounting for organizing accounts into categories within financial statements.

Liabilities

Financial obligations or debts a company owes to other entities.