An Aging of a Company's Accounts Receivable Indicates That $4,200

question 83

Multiple Choice

An aging of a company's accounts receivable indicates that $4,200 is estimated to be uncollectible.If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record bad debts for the period will require a

• A)debit to Bad Debts Expense for $4,200.
• B)debit to Allowance for Doubtful Accounts for $3,400.
• C)debit to Bad Debts Expense for $3,400.
• D)credit to Allowance for Doubtful Accounts for $5,000.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Cash Received

The total amount of cash received by a company during a specific period from all its activities, including operations, investments, and financing.

Direct Method

In accounting, the direct method is a way of reporting cash flows from operating activities by listing major categories of gross cash receipts and payments.

Income Taxes Payable

The amount of federal, state, or local taxes that a company is obligated to pay to the tax authorities, based on its earnings, within the current accounting period.