A Company Ages Its Accounts Receivables to Determine Its End

question 60

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

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Definitions:

Import Competition

The competition that domestic firms encounter from the products and services of foreign producers.

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Regulations or policies implemented by countries to control the import and export of goods and services.

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Limits set by a government on the quantity or value of certain goods that can be imported into a country.

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