Using the Allowance Method, the Uncollectible Accounts for the Year

question 176

Multiple Choice

Using the allowance method, the uncollectible accounts for the year is estimated to be $56,000. If the balance for the Allowance for Doubtful Accounts is a $14,000 credit before adjustment, what is the amount of bad debts expense for the period?

• A) $14,000
• B) $42,000
• C) $56,000
• D) $70,000

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Definitions:

Double Counting

A statistical or accounting error where a transaction or value is counted more than once, skewing results.

Parent

A company that controls or owns another company or companies.

Subsidiary

A company that is completely or partially owned and controlled by another company, known as the parent company.

Identifiable Asset

An asset that can be separated and sold, transferred, or licensed, and has a clear value or benefit to the business.