The Following Information Is from the 2015 Records of Armand

question 7

Multiple Choice

The following information is from the 2015 records of Armand Camera Shop: Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $5,000 of accounts receivable will be uncollectible. Calculate the Allowance for Bad Debts after the adjustment for bad debt expense at December 31, 2015.

• A)$5,250
• B)$6,500
• C)$7,000
• D)$5,000

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs of a product, indicating how much contributes towards covering fixed costs and earning profit.

Fixed Costs

Expenses that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.

Marginal Costs

The additional cost incurred from producing one additional unit of a product or service.

Break-even Quantity

The number of units that need to be sold for a business to cover its production costs, resulting in zero profit or loss.