At the End of the Period,the Manager of Olive Co

question 40

Multiple Choice

At the end of the period,the manager of Olive Co.estimated that $80,000 of its accounts receivable were uncollectible.If the Allowance for Doubtful Accounts has a credit balance of $22,400,which of the following sets forth the adjusting entry to record bad debts for the period? Assume the allowance method is used.

• A)Debit Bad Debt Expense and credit Accounts Receivable for $80,000.
• B)Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $57,600.
• C)Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $80,000.
• D)Debit Bad Debt Expense and credit Accounts Receivable for $57,600.

---

Definitions:

Net Sales

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and any discounts allowed.

Credit Losses

Financial losses that a lender anticipates or experiences due to borrowers failing to make required payments.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the amount of receivables that may not be collectible.