Using the Following Information - During 2016 Sales on Account Were $145000 and Collections

question 197

Multiple Choice

Using the following information: $$\begin{array} { l r } &\underline { 12 / 31 / 15 } \\\text { Accounts receivable } & \$ 525,000 \\\text { Allowance } &\underline { ( 40,000 ) } \\\text { Cash realizable value } & \underline { \$ 485,000 }\\\end{array}$$

- During 2016 sales on account were $145000 and collections on account were $100000. Also during 2016 the company wrote off $5000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $45000. Bad debt expense for 2016 is

• A) $35000.
• B) $5000.
• C) $10000
• D) $45000.

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Definitions:

Accounting

The systematic process of recording, summarizing, and analyzing financial transactions of a business.

Fundamental Qualities

Essential attributes or characteristics that contribute to the usefulness or value of information, especially in the context of financial reporting.

Verifiability

The quality of being able to be proven or confirmed as accurate or true.

Timeliness

The aspect of delivering or completing a task within an expected or designated timeframe.