The Allowance for Bad Debts Has a Credit Balance of $8,000

question 8

Multiple Choice

The Allowance for Bad Debts has a credit balance of $8,000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of- receivables method, the company's management estimates that uncollectible accounts will be $17,000. What will be the amount of Bad Debts Expense reported on the income statement?

• A) $25,000
• B) $9,000
• C) $17,000
• D) $8,000

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Definitions:

Marginal Benefit

The surplus happiness or utility experienced from using an extra unit of any good or service.

Public Good

A public good is a good that is non-excludable and non-rivalrous, meaning it can be used by everyone freely without depleting its availability to others.

Nonrivalry

A characteristic of certain goods where the consumption by one individual does not reduce availability to others, often seen in digital or public goods.

Nonexcludability

A characteristic of certain goods where it is difficult or impossible to prevent someone from using the good once it has been provided.