The Following Information Is from the 2017 Records of Lane

question 61

Multiple Choice

The following information is from the 2017 records of Lane Bicycle Shop:

Bad debts expense is estimated by the aging-of-receivables method.Management estimates that $6,000 of accounts receivable will be uncollectible.Calculate the ending balance of Allowance for Bad Debts,after the adjustment for bad debts expense,at December 31,2017.

• A)$5,400
• B)$9,000
• C)$8,000
• D)$6,000

---

Definitions:

Prepaid Expenses

Expenses paid in advance for goods or services to be received in the future.

Accounts Receivable

Amounts owed to a company by customers for goods or services provided on credit.

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Depreciation Expense

The allocated portion of the cost of a tangible or physical asset that is charged as an expense over its useful life.