Using the Percentage-Of-Receivables Method for Recording Bad Debt Expense, Estimated

question 211

Multiple Choice

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 debit before adjustment, what is the balance after adjustment?

• A)$45,000
• B)$51,000
• C)$39,000
• D)$6,000

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Definitions:

Economic Benefit Approach

A method used in accounting and taxation to evaluate transactions based on the economic value received as opposed to the legal form of the transaction.

Economic Worth

The value of an asset, company, or service determined through market dynamics, financial performance, and future earnings potential.

Financial Statements

Reports detailing the financial performance of a company, including balance sheet, income statement, cash flow statement, and statement of shareholders' equity.

Readily Observable

Pertains to information or data that is easily seen, recognized, or understood through minimal effort, often used in finance and economics.