The Allowance for Bad Debts Account Has a Debit Balance

question 183

Multiple Choice

The Allowance for Bad Debts account has a debit balance of $8000 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 $15,000.What amount of bad debts expense will be reported on the income statement?

• A) $4000
• B) $23,000
• C) $7000
• D) $15,000

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Definitions:

Mental Set

A framework for thinking about a problem based on previous experiences or methods, which can sometimes limit problem-solving abilities.

Intelligence Testing

the measurement of a person's intellectual abilities and potential, usually through a series of tasks and assessments that cover various cognitive skills.

Binet

Alfred Binet, a French psychologist best known for developing the first intelligence test.

Thurstone

Refers to Louis Leon Thurstone, an influential American psychologist known for his contributions to psychometrics and the theory of intelligence.