Milling Direct Uses the Aging of Accounts Receivable Balance Sheet

question 1

Multiple Choice

Milling Direct uses the aging of Accounts Receivable balance sheet approach to estimate uncollectibles. The total percentage of not yet due accounts deemed uncollectible are $930, 1-30 days past due accounts deemed uncollectible are $1,210, and over 30 days past due accounts deemed uncollectible are $710. If the company has a credit balance in Allowance for Doubtful Accounts of $850, what is the bad debts expense adjusting entry amount?

• A) $2,000
• B) $2,850
• C) $850
• D) $3,700

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Definitions:

Certificate of Deposit

A savings certificate entitling the bearer to receive interest, which has a fixed maturity date, and typically restricts withdrawal of funds before that date.

Breached the Peace

Breaching the peace refers to causing a disturbance or acting in a manner that disrupts public order or tranquility, often leading to legal penalties.

Public Lot

A plot of land owned by a governmental entity and made available for public use or development.

Unsecured Creditor

A creditor that does not have a claim to specific assets of the borrower as collateral for the debt, placing them at a higher risk of loss.