Using the Aging Approach,management Estimates That 10% of the $30,000

question 138

Multiple Choice

Using the aging approach,management estimates that 10% of the $30,000 of Accounts Receivable will be uncollectible.The Allowance for Doubtful Accounts has a $300 unadjusted debit balance.The adjusting entry to record estimated bad debts includes a:

• A)debit to Bad Debt Expense of $3,300.
• B)debit to Bad Debt Expense of $2,700.
• C)debit to Bad Debt Expense of $3,000.
• D)credit to Allowance for Doubtful Accounts of $3,000.

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Definitions:

Compounded Annually

Interest calculation method where interest is added to the principal once a year.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

End of Each Month

A recurring time period marking the completion of the last day of any month in a calendar year.

Compounded Monthly

Interest calculation method where interest accrued each month is added to the principal, and the new sum accrues additional interest.