Allowance for Doubtful Accounts Has a Credit Balance of $800

question 160

Multiple Choice

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment) , and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on this estimate, which of the following adjusting entries should be made?

• A) debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800
• B) debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200
• C) debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800
• D) debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800

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Definitions:

Oxygenated Blood

Blood that has been enriched with oxygen in the lungs and is pumped from the heart through the arteries to nourish the body.

Veins

Blood vessels that carry blood toward the heart, differing from arteries which carry blood away from the heart.

Left Atrium

A chamber among the heart's four, responsible for accepting blood enriched with oxygen from the lungs and propelling it into the left ventricle.

Congestive Heart

A condition, often termed congestive heart failure, where the heart is unable to pump blood efficiently, leading to fluid buildup in various parts of the body.