The Allowance for Bad Debts Account Has a Credit Balance

question 70

Multiple Choice

The Allowance for Bad Debts account has a credit balance of $2,000. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the amount of Bad Debts Expense reported on the income statement for 2015?

• A)$5,000
• B)$3,075
• C)$2,875
• D)$2,675

---

Definitions:

Fund Raising

The process of gathering voluntary contributions of money or other resources, typically for non-profit organizations or to finance a particular project or venture.

Tender Their Shares

The act of a shareholder submitting their stocks in response to a buyout offer.

Initial Public Offering

The process by which a private company offers shares of stock to the public for the first time.

Capital Contributions

Financial or other assets given to a company by its owners or shareholders to increase its equity or meet its financing needs.