A Company Had the Following Items and Amounts in Its

question 136

Essay

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
$$\begin{array} { l l l } &\text { Debit } & \text { Credit } \\\text { Cash sales } & & \$ 188,000\\\text { Credit sales } & & 275,000 \\\text { Accounts receivable } & \$ 76,000 &\\\text { Allowance for doubtful accounts } & &1,000 \\\end{array}$$
Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.

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Definitions:

Type I Error

The error of rejecting a true null hypothesis, also known as a "false positive."

Null Hypothesis

An assertion or proposition in statistics that indicates no significant difference or effect, serving as the default assumption to test against.

Type II Error

The error that occurs when the null hypothesis is falsely accepted, failing to detect an effect or difference when one actually exists.

Null Hypothesis

The hypothesis in statistical analysis that posits no significant difference or relationship exists among groups or variables being studied.