The Allowance for Doubtful Debts Has a Credit Balance of $8000

question 84

Multiple Choice

The Allowance for doubtful debts has a credit balance of $8000 before the adjusting entry for bad debt expense.After analysing the accounts in the accounts receivable subsidiary ledger using the ageing method,the company's management estimates that uncollectable accounts will be $15,000.What will be the amount of bad debts expense reported on the income statement?

• A)$23,000
• B)$8000
• C)$15,000
• D)$7000

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Definitions:

Appreciate

To increase in value or price over a period of time.

Freely Flexible Exchange Rates

A currency system where the value of a currency is allowed to fluctuate according to the foreign exchange market without direct government intervention.

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A situation where a country's imports of goods and services exceed its exports of them.

Peso Price

The value of a good or service expressed in pesos, the currency of various Latin American countries.