Using the Percentage-Of-Receivables Basis the Uncollectible Accounts for the Year

question 16

Multiple Choice

Using the percentage-of-receivables basis the uncollectible accounts for the year is estimated to be $33000. If the balance for the Allowance for Doubtful Accounts is a $5000 debit before adjustment what is the amount of bad debt expense for the period?

• A) $5000
• B) $28000
• C) $33000
• D) $38000

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Definitions:

Producer's Risk

The risk that a producer takes when a good batch is incorrectly rejected based on the sample quality test results, also known as Type I error in statistical testing.

Acceptance Sampling Plan

A statistical quality control method that determines the number of units from a batch to inspect to decide if the entire batch should be accepted or rejected.

AQL

Acceptable Quality Level is a statistical measurement of the maximum number of defective items considered acceptable in a sample size during quality control testing.

LTPD

Lot Tolerance Percent Defective, a quality control measure indicating the highest defect rate in a lot that consumers are willing to tolerate.