As of December 31,Frappe Company Has a Balance of $5,000

question 23

Multiple Choice

As of December 31,Frappe Company has a balance of $5,000 in accounts receivable.Of this amount,$500 is past due and the remainder is not yet due.Frappe has a credit balance of $45 in the Allowance for Doubtful Accounts.Frappe Company estimates its bad debt losses using the aging of receivables method,with estimated bad debt loss rates equal to 1% of accounts not yet due and 10% of past due accounts.How will the Bad Debt Expense account be included in the required adjusting journal entry at year-end?

• A)Debit of $95
• B)Credit of $95
• C)Debit of $50
• D)Credit of $50

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Definitions:

Cash Inflows

The total amount of money being transferred into a business, typically from operations, investments, and financing activities.

Cash Outflows

Payments or expenditures made by a business, resulting in a decrease in cash holdings.

Financing Activities

Transactions that involve raising capital, repaying investors, and altering the capital structure of the organization among other financing-related decisions.

Issuing Debt

The act of a corporation or governmental entity raising money by selling bonds or notes to investors.