Sandy Corporation Uses the Allowance Method of Accounting for Uncollectible

question 44

Multiple Choice

Sandy Corporation uses the allowance method of accounting for uncollectible accounts.During 2014,Sandy had charged $80,000 to Bad Debt Expense,and wrote off accounts receivable of $90,000 as uncollectible.What was the amount of the decrease in working capital as a result of these entries?

• A) $0
• B) $90,000
• C) $80,000
• D) $10,000

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Definitions:

Marginal Benefit

The increment in pleasure or usefulness experienced from consuming or creating an additional unit of a good or service.

Streetlights

Streetlights are outdoor lighting fixtures placed along streets, designed to enhance visibility and safety during nighttime.

Market Failure

A situation in which the allocation of goods and services by a market is not efficient, often leading to a net social welfare loss.

Marginal Benefit

The increased happiness or advantage derived from the consumption of one more unit of a good or service.