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:

Fixed Costs

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance costs.

Depreciation Expense

Depreciation expense represents the method used to allocate the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Annual Variable Costs

The costs that vary directly with the volume of production or sales within a specific year.

Worst-Case Scenario

The most adverse or unfavorable outcome that can occur in a situation.