The Allowance for Doubtful Debts Account Has a Credit Balance

question 83

Multiple Choice

The Allowance for doubtful debts account has a credit balance of $4000.The company's management estimates that 3% of net credit sales will be uncollectable for the year 2016.Net credit sales for the year amounted to $260,000.What will be the amount of Bad debts expense reported on the income statement for 2016?

• A)$3900
• B)$11,800
• C)$7800
• D)$3800

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Definitions:

Monitor

To observe and check the progress or quality of something over a period, often through the use of instruments or sensors.

Pending Code

A diagnostic trouble code that is stored in memory, but not displayed, the first time the ECM detects a potential fault. A second trip is required to confirm the fault and display a hard code.

Fault

An error or malfunction in a system, particularly in electrical or mechanical systems, indicating a deviation from normal operation.

MIL Light

Also known as the "Check Engine" light, an indicator on a vehicle's dashboard that alerts the driver to potential malfunctions within the engine or exhaust systems.