The Following Information Is from the 2019 Records of Fast

question 219

Multiple Choice

The following information is from the 2019 records of Fast Lane Racing Gear: $$\begin{array} { | l | l | } \hline \text { Accounts receivable, December 31, 2019 } & \$ 40,000 \text { (debit) } \\\hline \text { Allowance for Bad Debts, December 31,2019 prior to adjustment } & 2000 \text { (debit) } \\\hline \text { Net credit sales for 2019 } & 175,000 \\\hline \text { Accounts written off as uncollectible during 2019 } & 18,000 \\\hline \text { Cash sales during 2019 } & 30,000 \\\hline\end{array}$$ Bad debts expense is estimated by the aging-of-receivables method.Management estimates that $9000 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) $5250
• B) $13,000
• C) $8000
• D) $9000

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Definitions:

Contract Rate

Contract rate refers to the agreed-upon price or interest rate specified within a contract, often related to loans or financial agreements.

Premium

The additional cost above the normal or nominal amount, usually associated with insurance premiums, bond market pricing, or superior products and services.

Contra Liability Account

An account on a company's balance sheet that decreases the balance of a liability account to reflect its net value.

Discount

A discount refers to a reduction from the usual cost of an item or service, offered to incentivize purchase or payment.