At the End of a Period (Before Adjustment), Allowance

question 49

True/False

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500. Credit sales for the period total $800,000. If bad debt expense is estimated at 1% of credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500.

---

Definitions:

Line Organization

A direct and clear structure where authority flows vertically from the top management down to the lower levels.

Chain of Command

The official hierarchy within an organization that dictates the authority, responsibility, and communication flow among its members.

Line Departments

Parts of an organization directly involved in its primary revenue-generating activities, typically involved in the production, sale, or provision of services.

Staff Departments

Staff departments provide specialized administrative support and services to the organization and its management, without being directly involved in production activities.