A Company Ages Its Accounts Receivables to Determine Its End

question 16

Multiple Choice

A company ages its accounts receivables to determine its end of period adjustment for bad debts.At the end of the current year,management estimated that $15,750 of the accounts receivable balance would be uncollectible.
-Prior to any year-end adjustments,the Allowance for Doubtful Accounts had a credit balance of $375.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Bad Debts Expense } & 15,750 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,750 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Bad Debts Expense } & 16,125 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 16,125 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Bad Debts Expense } & 15,375 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,375 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 15,750 & \\
• \hline \text { Bad Debts Expense } & 375 & \\
• \hline \text { Sales } & & 16,125 \\
• \hline
• \end{array}\]
• E) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 16,125 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 16,125 \\
• \hline
• \end{array}\]

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Definitions:

Labor Supply Curve

A graph showing the relationship between the wage rate and the quantity of labor that workers are willing to provide at that rate.

Current Wage

The present amount of money that a worker receives in exchange for their labor, usually expressed per hour, day, or per work output.

Surplus of Labor

A surplus of labor occurs when the supply of labor exceeds the demand, resulting in unemployment or underemployment in the market.

Surplus of Labor

A situation where the supply of labor exceeds the demand for it, resulting in unemployment or underemployment.