Allowance for Doubtful Accounts Has a Debit Balance of $980

question 70

Multiple Choice

Allowance for doubtful accounts has a debit balance of $980 at the end of the current year (prior to adjustment) . Net credit sales for the current period amount to $900,000 and 2.5% is estimated to be uncollectible. The adjusting entry would require a credit to:

• A)bad-debt expense for $23,480.
• B)allowance for doubtful accounts for $21,520.
• C)allowance for doubtful accounts for $22,500.
• D)accounts receivable accounts for $22,500.

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Definitions:

Agreement

An understanding or arrangement reached between two or more parties, either formally or informally.

Enforce

Refers to the act of compelling observance or compliance with a law, rule, or obligation.

Contract

A legally binding agreement between two or more parties, enforcing obligations and rights in relation to the agreement.

Fraudulently Misrepresentation

An intentionally false representation of fact made by one party to another, with the intent to deceive and for the purpose of inducing the other party to act or refrain from acting in reliance on it.