At the End of the Current Year,Accounts Receivable Has a Balance

question 15

Multiple Choice

At the end of the current year,Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000.An analysis of receivables estimates uncollectible receivables as $25,000. Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts,respectively.

• A)$19,500 and $25,000
• B)$30,500 and $525,000
• C)$19,500 and $525,000
• D)$30,500 and $25,000

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Definitions:

Explicit Costs

Explicit costs are direct, out-of-pocket payments for resources or services needed for production, such as wages, rent, and materials; they're easily quantifiable and recorded.

Explicit Costs

Direct, out-of-pocket expenses incurred in conducting a business activity or making a decision.

Accounting Profits

The financial gains of a company calculated by subtracting total expenses from total revenues according to standard accounting practices.

Economic Profits

The financial difference between what a business earns in total revenue and what it spends, considering both explicit and indirect costs.