An Aging of a Company's Accounts Receivable Indicates That $5,000

question 23

Multiple Choice

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible.If Allowance for Doubtful Accounts has a $2,000 debit balance, the adjustment to record bad debts for the period will require a

• A)debit to Bad Debts Expense for $5,000.
• B)debit to Bad Debts Expense for $7,000.
• C)debit to Bad Debts Expense for $3,000.
• D)credit to Allowance for Doubtful Accounts for $2,000.

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Definitions:

Security

A financial instrument representing an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Net Losses

Refers to the situation where a company's expenses exceed its revenues for a given period, resulting in a negative profit.

Long-Term Losses

Financial losses on investments held for more than a year before being sold at a lower price than the purchase cost.