Using the Percentage-Of-Receivables Basis, the Uncollectible Accounts for the Year

question 193

Multiple Choice

Using the percentage-of-receivables basis, the uncollectible accounts for the year are estimated to be $38,000.If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debt expense for the period?

• A)$7,000
• B)$31,000
• C)$38,000
• D)$45,000

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Definitions:

Income Statement

A fiscal statement detailing a firm's income, expenditures, and earnings during a determined timeframe.

Cash Flows

The aggregate sum of funds moving into and out of a company, particularly influencing its liquidity.

Current Assets

Items that are likely to be cashed in, sold off, or used up within one year or during the usual operating period of a company.

Indirect Method

An approach used in cash flow statements to adjust net income for non-cash transactions and changes in working capital to calculate operating cash flow.