What Would Be the Basis for the Following Journal Entry

question 112

Multiple Choice

What would be the basis for the following journal entry if it appears on Travis Company records? Travis uses the allowance method. $\begin{array} { | c | l | } \hline \text { Allowance for Doubtful Accounts } & 150 \\\hline \text { Accounts Receivable -Tim Morgan } & 150 \\\hline\end{array}$

• A)The firm is estimating its uncollectible accounts.
• B)The firm is writing off a specific account.
• C)The firm is making a collection of a previously written-off account.
• D)It is a reversing entry.

---

Definitions:

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the level of production or sales volume, such as raw materials or direct labor costs.

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activities.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.