Manley Operates a Law Practice on the Accrual Method and Calendar

question 77

Multiple Choice

Manley operates a law practice on the accrual method and calendar year. At the beginning of the year, Manley's firm had an allowance for doubtful accounts with a balance of $16,000. At the end of the year, Manley recorded bad debt expense of $22,800 and the balance of doubtful accounts had increased to $18,200. What is Manley's deduction for bad debt expense this year?

• A)$22,800
• B)$2,200
• C)$25,000
• D)$4,600
• E)$20,600

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Definitions:

Raw Materials

Basic substances in their natural, modified, or semi-processed state, used as inputs for production.

Joint Operation

A business activity undertaken by two or more parties who maintain joint control and share both the assets and liabilities related to the operation.

Accounting Entry

A record that represents a transaction in the accounting books of a company.

Joint Control

Joint control exists in a business arrangement when more than one party has the power to govern the financial and operating policies of an economic activity to benefit from it.