Upon Completing an Aging Analysis of Accounts Receivable,the Accountant for Rosco

question 7

Multiple Choice

Upon completing an aging analysis of accounts receivable,the accountant for Rosco Works aged the accounts receivable and estimated that $5,000 of the $98,000 accounts receivable balance would be uncollectible.The allowance for doubtful accounts had a $400 debit balance at year-end prior to adjustment.How much is bad debt expense?

• A)$5,000
• B)$5,400
• C)$4,600
• D)$400

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Definitions:

Income Statement

A financial statement that reports a company's revenues, expenses, and profits over a specific period, showing the net income or loss.

Return On Stockholders' Equity

A measure of financial performance calculated by dividing net income by average shareholders' equity, showing how effectively management uses equity from shareholders to generate profit.

Preferred Dividends

Payments made to preferred shareholders of a company before dividends are paid to common shareholders, typically fixed and paid at regular intervals.

Average Common Stockholders' Equity

It represents the average equity stake that common shareholders have in a company over a certain period, calculated by averaging the opening and closing common stockholders' equity balances.