The Allowance for Doubtful Accounts Has a Current Debit Balance

question 89

Multiple Choice

The allowance for doubtful accounts has a current debit balance of $2,550. Bad-debt expense is estimated to be 3% of net credit sales. If net credit sales were $250,000, which of the following would be part of the adjusting entry for bad-debt expense?

• A)Debit allowance for doubtful accounts for $7,500.
• B)Credit allowance for doubtful accounts for $4,950.
• C)Debit bad-debt expense for $7,500.
• D)Debit bad-debt expense for $10,050.

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Definitions:

Transaction Cost

Expenses incurred when buying or selling goods or services, beyond the price of the goods or services themselves.

Specialized Resources

Resources uniquely suited or trained to perform specific tasks or functions within an economic system, enhancing efficiency and productivity.

Opportunity Cost

The financial loss associated with rejecting the subsequent optimal choice in any decision-making scenario.

Specialized Tools

Equipment or instruments designed for specific tasks or professions, enhancing efficiency and precision.