Industrial Equipment Supply Is a New Business

question 22

Multiple Choice

Industrial Equipment Supply is a new business.During its first year of operations,credit sales were $41,000 and collections of credit sales were $33,000.One account,$675,was written off.Management uses the aging-of-receivables method to account for bad debts expense and estimated $525 as uncollectible at year end.The ending balance of the Allowance for Bad Debts is ________.

• A) $145
• B) $820
• C) $1200
• D) $525

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Definitions:

Process Cost System

A method of accounting used in manufacturing where costs are assigned to products based on the process they go through in production, suitable for industries where products are indistinguishable from each other.

Process Costing

A method of costing used in industries where production is continuous, assigning costs to units of output based on the process they undergo.

Process Cost System

An accounting methodology used for homogenous products that accumulates costs by process or department for continuous production.

Transferred-in Costs

Costs that have been incurred in one department and are carried forward to a subsequent department for further processing.