On January 1,2017,Everlight Corp.has the Following Account Balances

question 149

Multiple Choice

On January 1,2017,Everlight Corp.has the following account balances:

Allowance for Bad Debts


During the year,Everlight has $150,000 of credit sales,collections of credit sales of $144,000,and write-offs of $3,400.It records bad debts expense at the end of the year using the aging-of-receivables method.At the end of the year,the aging analysis shows that $2,100 is the estimate of uncollectible accounts.Before the year-end entry to adjust the bad debts expense is made,the balance in the Allowance for Bad Debts expense is ________.

• A)a debit of $2,200
• B)a credit of $4,600
• C)a zero balance
• D)a debit of $3,400

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Definitions:

Equivalent Unit

A calculation used in cost accounting that converts partially completed goods into a number of complete units of output, helping in the costing process of production.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available during the period.

Units Transferred

The quantity of goods moved from one process, department, or location to another within a company's operations.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold based on the weighted average of the costs of goods available for sale.