Accelerated Solutions
the Following Information Is from the Company's Records

question 56

Multiple Choice

Accelerated Solutions
The following information is from the company's records for Year 1:
$\begin{array}{lr}\text { Accounts receivable - January 1, Year 1 } & 350,000 \\\text { Credit sales during Year 1 } & 1,200,000 \\\text { Collections from credit customers during Year 1 } & 850,000 \\\text { Customer accounts written off as uncollected during Year 1 } & 10,000 \\\text { Allowance for doubtful accounts -January 1, Year 1 } & 35,000 \\\text { Estimated uncollected accounts based on an aging analysis } & 50,000\end{array}$
-Refer to the figure Accelerated Solutions.If the aging method is used to estimate bad debts,what amount should be recorded as bad debt expense for Year 1?

• A) $5,000
• B) $15,000
• C) $25,000
• D) $50,000

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Definitions:

Market Price

The current price at which a good or service can be bought or sold, determined by supply and demand.

Diminishing Returns

A rule in economics that asserts once investments in a specific sector reach beyond a certain threshold, the returns on those investments will not keep rising if all other factors stay unchanged.

Marginal Costs

The additional cost incurred by producing one extra unit of a product or service, crucial for understanding economic efficiency and pricing.

Variable Costs

Expenses that vary directly with the level of production or output.