An Aging of a Company's Accounts Receivable Indicates That the Estimate

question 55

Multiple Choice

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

• A) debit to Bad Debt Expense for $7,700
• B) debit to Bad Debt Expense for $6,400
• C) debit to Bad Debt expense for $5,100
• D) credit to Allowance for Doubtful Accounts for $1,300

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Definitions:

Cash Payments

Outflow of cash as a result of transactions, such as paying expenses, purchasing assets, or repaying debt.

Free Cash Flow

The amount of cash generated by a company’s operations after accounting for capital expenditures, available for dividends, debt repayment, or reinvestment.

Property, Plant, Equipment

Long-term tangible assets owned by a business, used in its operations and not intended for resale, such as buildings, machinery, and vehicles.

Operating Activities

Business activities directly related to the production and delivery of goods and services, impacting the operating income.