The Following Information Is from the 2016 Records of Armand

question 48

Multiple Choice

The following information is from the 2016 records of Armand Camera Shop:
$$\begin{array} { | l | l | } \hline \text { Accounts receivable, 31 December 2016 }&\$ 45,000 \text { (debit) } \\\hline \text { Allowance for doubtfu l debts, 31 December 2016 } \\\text { prior to adjustment } & 1900 \text { (debit) } \\ \hline \text { Net credit sales for 2016 } & 178,000\\ \hline \text { Accounts written off as uncollectable during 2016 } & 19,000 \\\hline \text { Cash sales during 2016 } & 28,000 \\\hline\end{array}$$
Bad debts expense is estimated by the ageing of accounts receivable method.Management estimates that $8000 of accounts receivable will be uncollectable.Calculate the Allowance for doubtful debts after the adjustment for bad debt expense at 31 December 2016.

• A) $5340
• B) $8000
• C) $6000
• D) $11,800

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Definitions:

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.

Long-Run Profits

The amount of money a firm makes after all inputs have been adjusted to their optimal levels, considering the long-term outlook.

Short-Run Profits

Profits earned during a brief period of time, not considering long-term investments or fixed costs.

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, allowing for significant competition.