A Company Ages Its Accounts Receivables to Determine Its End

question 153

Multiple Choice

A company ages its accounts receivables to determine its end of period adjustment for bad debts.At the end of the current year,management estimated that $15,750 of the accounts receivable balance would be uncollectible.Prior to any year-end adjustments,the Allowance for Doubtful Accounts had a debit balance of $175.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

• A) \(\begin{array}{|l|c|c|}
• \hline \text { Bad Debt Expense } & 15,750 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,750 \\
• \hline
• \end{array}\)
• B) \[\begin{array} { |l | r | r | }
• \hline \text { Bad Debt Experse } & 15,575 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,575 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Bad Debt Experse } & 15,925 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,925 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 15,750 & \\
• \hline \text { Bad Debt Expense } & 175 & \\
• \hline \text { Sales } & & 15,925 \\
• \hline
• \end{array}\]
• E) \(\begin{array}{|l|c|c|}
• \hline \text { Accounts Receivable } & 15,925 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,925 \\
• \hline
• \end{array}\)

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Definitions:

Unit Contribution Margin

The amount by which the sale price of a unit exceeds its variable cost, indicating how much each unit contributes to covering fixed costs and generating profit.

Organic Fertilizer

A type of fertilizer made from natural organic materials, such as compost, manure, or bone meal, which enriches soil fertility without the use of synthetic chemicals.

Manufacturer

A person or company that makes goods for sale through the process of combining raw materials and components.

Net Operating Income

The profit generated from a company's regular business operations, excluding expenses and revenues from non-operating activities.