At 30 June 2012,MPQ Had a Balance in Accounts Receivable

question 14

Multiple Choice

At 30 June 2012,MPQ had a balance in accounts receivable of $500 000 and an allowance for doubtful debts of $40 000.It was decided to write off as irrecoverable a debt of X Ltd for $20 000.It was further decided that the allowance for doubtful debts should stand at 10% of accounts receivable.What was the DR side of the journal entry to bring the allowance for doubtful debts to the required level after writing off the debt of X Ltd?

• A) DR doubtful debts expense $26 000
• B) DR doubtful debts expense $30 000
• C) DR doubtful debts expense $28 000
• D) DR allowance for doubtful debts $26 000