The Allowance for Bad Debts Account Has a Credit Balance

question 64

Multiple Choice

The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debts expense.The company's management estimates that 2% of net credit sales will be uncollectible for the year 2017.Net credit sales for the year amounted to $270,000.What will be the balance of Allowance for Bad Debts on the December 31,2017 balance sheet?

• A)$5,400
• B)$2,000
• C)$7,400
• D)$5,360

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Definitions:

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Assets co-owned by partners in a business partnership, where each partner has an interest in these assets in relation to their investment or agreement.

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An institution where legal disputes are adjudicated by judges or a jury.

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A substantial and typically sophisticated piece of mechanical equipment, often used in industrial or manufacturing processes.

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Tasks or activities performed by an individual that are intended for personal satisfaction, development, or benefit, rather than for employer profit.