Earl Company Uses the Accrual Method of Accounting

question 71

Multiple Choice

Earl Company uses the accrual method of accounting. Here is a reconciliation of Earl's allowance for bad debts for the current year.
Beginning allowance for bad debts $ 950,000
Actual write-offs of accounts receivable during the year (899,600 )
Addition to allowance 845,000
Ending allowance for bad debts $ 895,400
Which of the following statements is true?

• A) Bad debt expense per books is $845,000, and the deduction for bad debts is $899,600.
• B) Bad debt expense per books is $899,600, and the deduction for bad debts is $845,000.
• C) Bad debt expense per books and the deduction for bad debts is $899,600.
• D) Bad debt expense per books and the deduction for bad debts is $895,400.

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Definitions:

Twins

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Zygote

An ovum that has been fertilized by a sperm and thus contains a full complement of 46 chromosomes, half from the mother and half from the father.

Prenatal Deprivation

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Cognitive Deficits

Shortcomings or impairments in cognitive functions such as memory, attention, and problem-solving abilities.