An Aging of a Company's Accounts Receivable Indicates That the Estimate

question 136

Multiple Choice

An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a

• A) debit to Allowance for Doubtful Accounts for $3,200
• B) debit to Bad Debt Expense for $3,200
• C) debit to Allowance for Doubtful Accounts for $4,000
• D) credit to Allowance for Doubtful Accounts for $4,000

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Definitions:

Restatement of Contracts

A set of model legal rules relating to contracts intended to clarify the principles of contract law and serve as a reference for judges and lawyers.

Preexisting Moral Obligation

A moral duty or responsibility that already exists before any new agreement or contract is made.

Consideration

The value (such as money, a service, or a promise) that is exchanged between parties in a contract.

Doctrine of Promissory Estoppel

A legal principle that prevents a promisor from retracting a promise that the promisee has relied upon, resulting in a significant change of position.