You Have Just Received Notice That a Customer of Yours

question 44

Multiple Choice

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments.Assuming you use the allowance method, the entry you make is to

• A)debit Allowance for Doubtful Accounts and credit Bad Debt Expense.
• B)debit Allowance for Doubtful Accounts and credit Accounts Receivable.
• C)debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
• D)debit Bad Debt Expense and credit Accounts Receivable.

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Definitions:

Tariff

A tax or duty to be paid on a particular class of imports or exports, often used as a tool for trade policy.

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specified time period.

Revenue

The total income generated by a business or government from its activities, including sales of goods and services, taxes, and other sources.

Importer or Exporter

A business or country that buys goods from abroad (importer) or sells goods to foreign countries (exporter).