At January 1, Everbright Sales Has the Following Balances

question 161

Multiple Choice

At January 1, Everbright Sales has the following balances: During the year, Everbright has $150,000 of credit sales, collections of $140,000, and write-offs of $3,000. Everbright records Uncollectible accounts expense at the end of the year using the aging method. At the end of the year, the aging analysis produces a figure of $1,900, being the estimate of uncollectible accounts at end of year.
Before the year-end entry to adjust the Uncollectible accounts expense is made, what is the balance in the Uncollectible accounts expense?

• A)Debit of $1,400
• B)Credit of $1,944
• C)Zero balance
• D)Credit of $544

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Definitions:

Direct Relationship

A relationship between two variables in which they move in the same direction, meaning as one variable increases, the other also increases.

Independent Variable

A variable presumed to influence or cause changes in another variable, referred to as the dependent variable.

Regression Analysis

Regression analysis is a statistical method used for estimating the relationships among variables, often to determine how the typical value of the dependent variable changes when any one of the independent variables is varied.

Least Squares Line

The best-fitting straight line through a set of data points, minimizing the sum of the squares of the vertical distances of the points from the line.