A Notice Was Received from Mary,who Is a Customer,that She

question 109

Multiple Choice

A notice was received from Mary,who is a customer,that she was bankrupt.The entry to write-off her balance of $1,250 would be:

• A) \(\begin{array} { | c | l | }
• \hline \text { Allowance for Doubtful Accounts } & 1,250 \\
• \hline \text { Accounts Receivable/Mary } & 1,250 \\
• \hline
• \end{array}\)
• B) \(\begin{array} { | c | l | }
• \hline \text { Accounts Receivable/Mary } & 1,250 \\
• \hline \text { Bad Debt Expense } & 1,250 \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|lll|}
• \hline \text { Bad Debt Expense } & 1,250\\
• \hline \text { Allowance for Doubtful Accounts } & 1,250\\
• \hline
• \end{array}\)
• D)None of the above

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Definitions:

Redeemed Bonds

Bonds that have been repaid by the issuer prior to or at maturity, removing the debt obligation from the issuer's balance sheet.

Purchased Patents

Intellectual property rights acquired from another entity, granting exclusive rights to use, make, sell, or distribute the patented technology or product.

Gain On Sale

The profit that results from selling an asset for more than its purchase price.

Net Income

The total earnings or profit of a company after all expenses and taxes have been deducted from total revenue.