At the Beginning of 2010, Cyrus Corp

question 9

Essay

At the beginning of 2010, Cyrus Corp.'s allowance for doubtful accounts is $12,500.
During 2010, $4,250 was written off as uncollectible. At December 31, the company used an aging schedule of accounts receivable and determined that $10,530 of the accounts receivable would probably be uncollectible. What would be the bad debts expense that should be reported on Cyrus's 2010 income statement?
a. $5,720
b. $26,780
c. $2,280
d.$18,280

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Definitions:

Fair Value Accounting

An accounting approach where assets and liabilities are recorded at their current market value, not just historical cost.

Valuation Allowance

An allowance against deferred tax assets indicating that it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Trading Investments

Securities bought and held primarily for selling in the short term to profit from price differences.

Realized Gain

The profit made from selling an asset at a higher price than its purchase cost.