The Allowance for Doubtful Debts Currently Has a Debit Balance

question 144

Multiple Choice

The Allowance for doubtful debts currently has a debit balance of $900. After analysing the accounts in the accounts receivable subsidiary ledger using the ageing of accounts method, the company's management estimates that bad debts will be $15 000. What will be the amount of Bad debts expense reported on the income statement?

• A)$15 900
• B)$14 900
• C)$14 100
• D)$15 000

Know how to implement primary keys and their significance in database management.

Learn how to manage records within tables, including adding, deleting, and importing records.

Gain knowledge of opening, viewing, and modifying queries to extract specific data from a database.

Acquire skills in database management tasks such as backing up the database and modifying field properties.

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Definitions:

Credit Instrument Captive Finance Company

refers to a financial subsidiary company operated by a parent company primarily to provide financing for the sales and leasing of their products by offering credit to its customers.

Operating Cycle

The period it takes for a business to buy inventory, sell products, and collect cash from customers, essentially measuring the time between purchasing materials and receiving cash from sales.

Credit Period

The time duration given by a seller to a buyer to pay for a product or service, typically expressed in days.

Inventory Period

The average time that goods remain in inventory before being sold, indicating the efficiency of inventory management.