The Allowance for Bad Debts Account Has a Credit Balance

question 164

Multiple Choice

The Allowance for Bad Debts account has a credit balance of $4000 before the adjusting entry for bad debts expense.The company's management estimates that 5% of net credit sales will be uncollectible for the year 2019.Net credit sales for the year amounted to $280,000.What is the amount of Bad Debts Expense reported on the income statement for 2019?

• A) $14,000
• B) $18,000
• C) $7000
• D) $10,000

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Definitions:

Poverty

A condition where individuals or communities lack the financial resources and essentials for a minimum standard of living.

Industrialized Nations

Countries that have undergone significant industrial development, characterized by advanced technological infrastructure and a high standard of living.

American Indian

A term historically used to refer to the indigenous peoples of the Americas, although many prefer other terms such as Native American, Indigenous American, or by their specific tribal affiliation.

Casino Money

Revenue generated from casino operations, often discussed in the context of its impact on economies, particularly in regions with a high concentration of casinos or in Native American communities.