The Allowance for Bad Debts Account Has a Debit Balance

question 154

Multiple Choice

The Allowance for Bad Debts account has a debit balance of $9,000 before the adjusting entry for bad debts expense.After analyzing the accounts in the accounts receivable subsidiary ledger,the company's management estimates that uncollectible accounts will be $10,000.What will be the amount of the adjustment in the Allowance for Bad Debts account?

• A)$18,250
• B)$10,000
• C)$17,900
• D)$19,000

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Definitions:

Closed

In accounting, this term refers to accounts that have been concluded for a period, typically at the end of an accounting cycle, by transferring their balances to permanent accounts.

Service Revenue

Income earned by a company from the services it provides to customers, as opposed to selling goods.

Equipment

Tangible assets used in operations, such as machinery and computers, that have a useful life beyond one year.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of shareholders or owners.