The Following Information Is from the 2019 Records of Fast

question 77

Multiple Choice

The following information is from the 2019 records of Fast Lane Racing Gear:

Bad debts expense is estimated by the aging-of-receivables method.Management estimates that $7,000 of accounts receivable will be uncollectible.Calculate the ending balance of Allowance for Bad Debts,after the adjustment for bad debts expense,at December 31,2019.

• A)$5,340
• B)$10,400
• C)$8,000
• D)$7,000

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Definitions:

Apparent Authority

Apparent authority refers to a situation in which a person appears to be given power to act on behalf of another, thereby binding the principal through the agent's actions, even if the actual authority has not been granted.

Misrepresentation

The act of providing false or misleading information, intentionally or unintentionally, in a transaction.

Scope of Authority

The boundaries within which decisions can be made or actions can be taken by an agent as authorized by a principal.

Emergency Situation

A sudden, urgent, usually unexpected occurrence or condition that requires immediate action or assistance.